A security deposit acknowledgment letter is a professional document verifying a security deposit has been paid, used for expenses, or refunded. Landlords should carefully track security deposit funds, and writing a security deposit acknowledgment letter can help them do this. These letters are receipts documenting the payment, use, or refund of a security deposit.
This article discusses the need for security deposit accounting and provides a format for a security deposit acknowledgment letter. We have also provided a sample letter to demonstrate the format’s use.
Handling Security Deposit Funds
Security deposits protect you as a landlord from unexpected costs, such as apartment repairs or unpaid rent. Security deposits belong to the tenant unless you need them for unpaid expenses or repairs. You should keep these funds in an escrow or savings account. You must pay interest on the deposit funds either annually or at the end of the tenant’s lease in some states. Write a security deposit acknowledgment letter when:
- A tenant pays a security deposit
- You pay interest on the deposit
- You use the funds for apartment damages
- You use the funds for unpaid rent or broken lease
- You refund all or part of the security deposit
This careful accounting will help ensure that you meet the state and local requirements for security deposits. Each letter (or receipt) you write should be signed by both the tenant and the landlord and dated. Send the tenant a copy of the letter within 30 days of signing.
Each state has time limits on when you must refund or account for a tenant’s security deposit. In every case, you must do this within 60 days of the tenant’s move date. Check your state’s tenant and landlord laws for more detailed information.
Writing a Security Deposit Acknowledgment Letter
Your letter will vary according to whether or not you need to use the security deposit funds for repairs, broken leases, or unpaid rent. In addition, your letter may need to reflect information about the escrow or savings account in which you hold the funds. You might also need to account for annual interest payments on the funds. Formatting your security deposit acknowledgment letter can be simple when you have a prepared example that incorporates each of these requirements. Below, you will find a format that includes example areas for all of these needs. When using this format, you can choose to remove the sections that do not apply or leave them in for an all-purpose format.
Security Deposit Acknowledgement Letter Format
{your name}
{company name}
{company address}
{date}
{tenant name}
{tenant address}
Subject: Security Deposit
The tenant {tenant name} paid the landlord {landlord name} a security deposit of {amount} on {date} for the following property:
Property Address: __________________________________________________________________
Security Deposit Escrow Account
Account Name:__________________________
Account Number: ________________________
Account Type: ___________________________
Annual Interest Rate:______________________
Bank Name: ____________________________
Bank Address:___________________________
____________________________
Interest Paid:_____________________________
Check Number:___________________________
Date:___________________________________
Deductions from Security Deposit {tenant name}
The landlord {landlord name} {(refunded) or (did not refund)} the tenant’s security deposit on {date}.
Amount Refunded:__________________
Check Number:_____________________
________________________________ _____________________
{landlord name} {date}
_________________________________ ______________________
{tenant name} {date}
Sincerely,
{your signature}
{your name}
Sample Security Deposit Acknowledgement Letter
Brent McIntyre
Neverland Properties
2048 North Jackson, Suite 200
Harrison, PA 45668
September 20, 2032
Ellen High
6004 West 93 E. Ave.
Harrison, PA 45665
Subject: Security Deposit
The tenant Ellen High paid the landlord Brent McIntyre a security deposit of $2000.00 on September 1, 2030, for the following property:
Property Address: 2048 North Jackson, Apt. 206
Security Deposit Escrow Account
Account Name: Neverland Properties Escrow
Account Number: 69843326
Account Type: Escrow
Annual Interest Rate: 0.05
Bank Name: Harrison Savings and Loan
Bank Address: 2046 South Midland
Harrison, PA 55669
Interest Paid: $20.00
Check Number: 596678
Date: September 20, 2032
Deductions from Security Deposit Ellen High
The landlord Brent McIntyre refunded part of the tenant’s security deposit with interest on September 20, 2032.
Amount Refunded: $1920.00
Check Number: 596678
Brent McIntyre
Brent McIntyre September 20, 2032
Ellen High
Ellen High September 20, 2032
Sincerely,
Brent McIntyre
Brent McIntyre
Security Deposit Acknowledgement Letter (Word Template)
- Check your state’s tenant and landlord laws for the regulation of security deposit funds
- Use best practices in all your security deposit accounting
- Write a receipt or acknowledgment letter when you transfer funds
- Obtain the tenant’s signature
- Provide the tenant with a copy of each security deposit acknowledgment letter
## Current-Year Updates & Best Practices (2026)
Most security-deposit requirements are still governed primarily by **state and local law**, not a single nationwide “new rule” that changes every year. That said, landlords should be aware of several **current, widely relevant practices and trends** that can affect what you include in a security deposit acknowledgment letter and how you manage deposit funds.
### 1) Check for Recent State/Local Changes Before You Use a Template
Security-deposit rules are frequently updated at the **state or city** level (especially in larger metro areas). Before using any deposit letter language, confirm current requirements for:
– **Maximum deposit amount** (some jurisdictions cap deposits or limit them for certain tenants)
– **Where deposits must be held** (separate account, escrow requirements, commingling prohibitions)
– **Interest rules** (rate, timing, and whether notice of the account is required)
– **Deadlines for itemized statements and refunds**
– **Move-in/move-out inspection requirements** and required notices
**Best practice:** Add a short internal checklist step (not necessarily in the letter) to verify current local rules each time you start a new lease.
### 2) Digital Payments and Recordkeeping Are Now the Norm—Make Receipts Audit-Friendly
Many tenants pay deposits electronically, and many landlords manage records digitally. Your acknowledgment letter can (and often should) document:
– **Payment method** (ACH, debit/credit, Zelle, online portal, etc.)
– A **transaction ID** or confirmation number
– The **date funds cleared**, if different from the date initiated
**Best practice:** Treat the letter like an accounting receipt. Consistent, traceable references reduce disputes and simplify compliance.
### 3) Provide an Itemized Statement Standard—Even When You Refund in Full
Even if your jurisdiction only requires itemization when making deductions, it’s increasingly common to provide a simple statement showing:
– Deposit received
– Interest (if applicable)
– Deductions (if any)
– Amount returned and date returned
**Best practice:** Standardize one format that can handle “no deductions” cleanly—this keeps your process consistent and reduces errors.
### 4) Clarify “Normal Wear and Tear” vs. Chargeable Damage
Disputes often turn on whether charges were legitimate. While your letter doesn’t need to define the term exhaustively, it’s helpful to ensure your **deduction section** ties charges to:
– **Specific damage or unpaid rent**
– **Dates** (when known)
– **Supporting documentation** (photos, invoices, cleaning bill, etc.)
**Best practice:** When deductions occur, attach or reference documentation and keep copies with your ledger.
### 5) Security and Privacy Considerations (Recommended Update to the Template)
Your sample format includes sensitive banking details (account number). In many cases, providing a full account number to tenants is unnecessary and can create security risk.
**Best practice:** If local law requires account disclosure, consider using:
– **Bank name + account type**, and **last 4 digits only** of the account number (unless your jurisdiction explicitly requires the full number).
### 6) Delivery Method: Match Legal Notice Rules and Keep Proof
Some jurisdictions specify acceptable delivery methods for deposit notices, itemizations, or refunds.
**Best practice:** When sending the acknowledgment letter (and later the refund/itemization), use a method that produces proof of delivery, such as:
– Certified mail (where appropriate)
– Email with read receipt (only if permitted/recognized locally)
– Portal delivery with timestamped logs
### 7) Don’t Add “Annual Interest” Sections Unless They Apply
Not all states require interest, and where it exists, the rules vary significantly.
**Best practice:** Keep the interest fields **optional** in your template, and only include them when required or when you actually pay interest.
—
If you tell me the **state (and city, if applicable)** where the property is located, I can suggest which fields in your format are most commonly required there (without changing the evergreen tone of the article).
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