In addition to the security deposit clause in your lease, which details the policies and procedures for the security deposit, you should have a separate document which will serve as a security deposit acknowledgement. This acknowledgement will be proof that you have received the tenant’s security deposit. This document will be a rider to your lease. The tenant will sign it at the same time they sign the lease agreement.
In states that require you to inform the tenant of the bank and the interest rate where their money is being held, this acknowledgment will also serve as this notice. You should send a copy of this notice to the tenant within 30 days of receipt of their security deposit. In addition, when the tenant’s lease is up, or according to your state’s laws, often annually, you must give them the interest earned by their security deposit. When it comes time to pay the tenant the interest, you must again have the tenant sign this notice and give them a copy within 30 days so the tenant acknowledges they have received the interest they are entitled to.
It is very important to acknowledge receipt of the security deposit. This protection is for you, for the tenant and for any future buyer of your property.
This acknowledgement protects you, the landlord, because many states require you to notify the tenant in writing as to where their security deposit will be held in escrow.
The security deposit acknowledgement is important to the tenant because it serves as proof that they did in fact pay their deposit. It also provides them with the peace of mind of knowing where their deposit is being held.
This clause is equally as important to any prospective buyer of the property. The buyer may not be aware that a security deposit has been collected is there is not a specific acknowledgement of receipt of funds. As the new owner, they will still be responsible for returning the security deposit to the tenant, whether or not they are aware it had been collected. With the awareness of the security deposit, they can have the total amount of security deposit built into the sale price of the property.
SAMPLE SECURITY DEPOSIT ACKNOWLEDGEMENT:
This is an acknowledgement that the Tenant Insert Tenant’s Name residing at Insert Tenant’s Address, paid the Landlord a Security Deposit of Insert Amount of Security Deposit Paid on Insert Date the Deposit Was Received. The terms regarding receipt, storage (escrow) and return of the Security Deposit have been spelled out and agreed to by the Tenant in the original Lease agreement.
This shall serve as the Tenant’s annual report of Tenant’s Security Deposit.
Tenant’s Security Deposit is being held according to the following details:Account Name:..........................Landlord Account Name
Account Type:............................Account Type
Account Number:.......................Account Number
Bank Name:...............................Bank Name
Bank Location:...........................Bank Location
Annual Interest Rate:................Annual Interest Rate
Security Deposit Amount as per Tenant’s Lease Agreement:..........$ Security Deposit
Annual Interest Due Tenant as per Account Interest Rate:..................$ Interest Owed
__________Tenant has been paid the annual interest as of the date of this Notice.
__________Tenant has not been paid the annual interest as of the date of this Notice.
Tenant(s): __________________________ Date: __________ Time: ____________
Management: _______________________ Date: __________ Time: ____________
Disclaimer: The information provided on this website, and any outside information linked to, is for guidance only. It is not legal advice. Please consult legal counsel for advice specific to your situation.