Jun 25, 2015

Refunding a Tenant's Security Deposit - A.R.S. 33-1321

How to Properly Handle a Tenant's Security Deposit

Per A.R.S. § 33-1321(D) of the Arizona Residential Landlord and Tenant Act, a landlord must send a disposition of deposit letter to the former tenant within 14 business days. If the cost of the damage doesn’t exceed the deposit, the remainder of the deposit should be included. On the other hand, if the cost of the damage exceeds the deposit, this is your chance to state how much they owe you.

This letter needs to be sent within fourteen business days from the date your tenant vacated the property or the landlord can be subject to civil penalties.

If lawsuit arises in which a tenant claims their security deposit was kept unlawfully, and you didn’t send this letter, you could be at risk for “treble damages” – that is, three times what you kept unlawfully A.R.S. § 33-1321(E). Sending this letter goes a long way towards making sure all your bases are covered.

Our firm offers a free form letter which you can fill in and send to your tenant, or use as a template to create your own. Click here to download this form letter.

In cases where the tenant was evicted for nonpayment of rent, you can keep the deposit to cover the judgment amount, but you will still need to send a letter informing your tenant of such.  Additionally, if you have a judgment for unpaid rent, and there are a lot of damages to the property, you don’t have to put the deposit towards the judgment – you can still use it to cover the damages, and then pursue the judgment amount using wage garnishment or bank levy, which you can read about here.