Damage to Your Property

• The main reason for keeping the deposit is if the tenant damaged your property. "Damage" does not include "normal wear and tear," such as faded paint or worn carpets, which are your responsibility to clean or replace in between tenants. However, you can keep all or part of the deposit to cover things like replacing a sink that the tenant let become dirty beyond cleaning or painting over walls that the tenant changed without your permission. If doing this, you must send the tenant a letter itemizing expenses, how much you took out and why.
  
  

Tenant Rights

• A tenant who gives you notice according to the terms of the lease and showed care for your property should receive his deposit back, in full, along with the interest that the money earned when it was in your bank account, if applicable. Typically, you have between 30 and 60 days after he left the property to return the deposit.
  
  

Lease Specifications

• The lease you give your tenant will detail any specifics regarding the deposit. For example, if the tenant signed a year-long lease and decides to leave the property, you may be able to take money out of his deposit to cover the time that the property is not rented. If you find another tenant immediately, however, you are not entitled to the deposit. In some cases, you the tenant may be liable for any advertising or costs associated with finding another tenant.
  
  

Where the Money Goes

• When the tenant gives you a deposit, you must put the money in a separate bank account that is unavailable to your creditors. At no point are you allowed to take the money and spend it as though it's yours, even if you plan to replace it before your tenant moves out.