Send Deposit Accounting & Refund at Move Out

One of the most common missteps for inexperienced housing providers is the handling of the deposit at move-out. A recent state law passed in 2023 changed some of the policy and clarified what types of damages you can deduct from a refundable deposit.

1. Do Not Access the Deposit During Tenancy
   The deposit must only be accessed by the housing provider in compensation for legitimate damages after the tenant moves out. Do not access the funds for any reason during the tenancy, even if the tenant requests it. If the tenant owes you money for a repair during tenancy, simply send them an invoice. If one resident moves out and others remain, they need to work out transferring their share of the deposit on their own. The deposit refund accounting must be handled in a very specific way under the law, and it is best not to complicate matters.
   
   
2. Make Expectations Clear Before Move Out
   Use the Move-Out Instructions to make sure the tenant understands they will be charged for any cleaning that is not done per your specifications. This is also a good way to clarify the move-out timeline, return of keys, the designated tenant if there are unrelated roommates, and getting their forwarding address.
   
   
3. Begin Counting 30-Day Refund Period the Day After Move Out
   If you do not mail the deposit accounting and any refund by 30 days of moveout (or a shorter period if specified by the lease or local law), you will lose the full deposit, and a judge could award double damages to the tenant. Therefore, it is important to establish the day when the tenant relinquishes the premises back to you. RCW 59.18.280 (see HB 1074 2023) states “Within 30 days after the termination of the rental agreement and vacation of the premises or, if the tenant abandons the premises as defined in RCW 59.18.310, within 30 days after the landlord learns of the abandonment, the landlord shall give a full and specific statement of the basis for retaining any of the deposit, and any documentation required by (b) of this subsection, together with the payment of any refund due the tenant under the terms and conditions of the rental agreement.” In most cases, the first day of the 30-day period is the day after the last day of the rental term, and the tenant moves out and returns keys as planned. Here are some other examples that would count as your first day of the 30-day period:
   
   The tenant tells you they need two extra days to move out after the end of the term or rental period, and you agree to allow it with a prorated rent charge. Begin counting the day after they are moved out and have returned the keys.
   The tenant moves out at some point before the end of the term or rental period, but has not notified you or returned the keys, and does not answer emails. Once you confirm they have moved out (serve abandonment notice and inspect if necessary), begin counting the day after you confirm the move out.
   
   The tenant communicates that they are breaking a lease and moving out early. Even though their rental term legally continues until you find a new tenant, begin counting the day after they move out and turn in the keys.
   
   
4. Document “Before & After” Condition of the Property
   In order to complete the property condition report, you must have a copy of the Property Condition Checklist signed by the tenant at move-in. If you do not have this report, you cannot legally retain any of the deposit for property damages. (Note: if you realize you are missing this report mid-tenancy, inspect and complete the form, noting that the deposit will only be used for damage between the inspection and move-out.) Once the tenant moves out, complete a thorough inspection of the property and document all changes in condition by completing the move-out section of the Property Condition Checklist started at move-in. Take photos of any damaged areas.
   
   
5. Only Charge Tenant When They Are Responsible
   Go through the property condition list and indicate where there is damage that was the fault of the tenant due to accident, negligence, or inappropriate use. Do not charge the tenant for wear resulting from ordinary use, or damages that resulted from a maintenance issue that was your responsibility. Also, do not charge them for damage to something that you needed to replace anyway (e.g., a 12-year-old carpet).
   New law effective 7/23/2023 prohibits landlords from routinely charging for professional carpet cleaning at move-out unless the carpet is in poor condition resulting from the tenant’s treatment of the carpet that was outside of ordinary use.
   Read more about how to determine responsibility in the article: Determine Responsibility for Repairs.
   
   
6. Complete the Work Within the 30-Day Window
   Make every effort to complete all repairs and cleaning that will be charged to the tenant within the 30-day period. Only after failing to remedy damages within the 30 days while making every conceivable effort, you may mail a preliminary deposit refund statement showing all charges to date, along with a letter explaining the remaining damages which have not been completed, and an estimated date for their completion. Issue the final deposit refund statement based on final charges as soon as possible.
   
   
7. Charge Outstanding Rent or Utilities
   If the deposit is not limited in some way to repairs, cleaning, pets, etc., the deposit may be applied toward unpaid rent. Rent is defined as all recurring charges, including utilities, and any monthly fees for parking, storage, pets, etc.
   
   
8. Thoroughly Document All Charges
   Keep all communications and receipts related to work completed. As of 2023, the law requires you to provide a full and specific statement of all charges to the tenant along with copies of receipts, invoices, estimates, labor log or other documentation of repair and cleaning related costs. If you are charging for work you did yourself, use the hourly rate you listed in your lease under section 3.E. of the RHAWA lease form and include a detailed log of your time. Assemble the completed Deposit Refund Statement, all documentation, and refund payment, then make a copy of everything for your files before mailing to the tenant.
   
   
9. Mail Statement and Refund to Tenant at Last Known Address by the Due Date
   The law requires that you mail the statement, documentation, and any refund to the tenant’s forwarding address or their last known address via USPS First Class Mail within 30 days of moveout. If you do not mail the statement on time, you cannot legally keep any of the deposit, and a judge may award the tenant double damages, requiring you to return the full deposit and pay the tenant additional funds equal to the full deposit amount.
   
   If you have sent the refund digitally or using another method with the tenant’s agreement, include a statement to that effect.
   
   If you choose to send an additional copy using another method, such as registered mail or a delivery service such as FedEx, you still must send a copy via USPS First Class Mail to fulfill your duty under the law.
   
   If you have multiple unrelated tenants on the same lease, the best practice is to provide one Deposit Refund Statement and a check payable to all persons who signed the lease and mailed to a designated address.
   
   If you have not established a designated forwarding address and cannot get this information from the tenant prior to the due date, list all tenant names and mail to the rental property address using regular USPS First Class Mail. If they have completed the mail forwarding instructions for the post office, it will be forwarded to them. If not, at least you have documentation that you did everything in your power to deliver the statement on time and have fulfilled your duty under the law.
   
   In all cases, document that you mailed the statement and any refund by taking pictures and/or by asking the post office for a certificate of mailing. If the deposit does not cover all the charges, list the amount owed on the Deposit Refund Statement. If they do not pay, you may send follow-up letters and then handle it through Small Claims Court or collections as needed.
   
   
10. Respond to Disputes Fairlyand Thoughtfully
    If a tenant disputes any charges, address their concern carefully. Make sure to investigate anything they call into question, such as a claim that they reported a leak or that something broke because it was old and worn out, not due to misuse by them. Make any adjustments to the statement and send any additional refund as soon as possible.
    
    Deposit return issues are the most common landlord-tenant dispute. Keep in mind that it is your responsibility to maintain your property under normal use by a tenant. That means you will need to replace major appliances, carpet, paint, etc. on a regular basis at your own expense. Also, remember that a deposit by definition is always fully refundable and that most tenants rely upon the return of the deposit in order to secure their next residence. If they have obviously made a good effort to return the home in good, clean condition, do not charge them unnecessarily. A dispute is likely to end in the tenant’s favor and will only cause additional strain on your valuable time and resources.