Deposit Recovery Guide: Getting Your Money Back

Deposits protect businesses, but sometimes they're wrongfully kept. The U.S. Department of Housing and Urban Development (HUD) provides resources on tenant rights, including security deposit protections. Whether you're dealing with a landlord, service provider, or event venue, understanding your rights helps you recover the money you're owed.

Types of Deposits

Security Deposits (Rental)

• Held to cover damage beyond normal wear
• State laws govern return deadlines
• Must provide itemized deductions
• Often limited in amount by law

Service Deposits

• Contractors, vendors, event venues
• Terms depend on contract
• May be non-refundable if specified
• Should be credited or returned per agreement

Utility Deposits

• Required by utility companies
• Should be returned when service ends
• May earn interest
• Apply toward final bill

Pet Deposits

• Additional deposit for pets in rentals
• Often non-refundable (check lease)
• Different from pet rent
• State laws may apply

Rental Security Deposits

State Law Protections

• Maximum deposit limits (often 1-2 months)
• Return deadline (typically 14-30 days)
• Itemized statement requirement
• Penalties for late return
• Interest requirements (some states)

Valid Deductions

• Damage beyond normal wear and tear
• Unpaid rent
• Cleaning (if beyond normal)
• Unreturned keys

Invalid Deductions

• Normal wear and tear
• Repainting for normal fading
• Carpet cleaning (unless excessive)
• Pre-existing damage
• Improvements/upgrades

Recovery Steps

1. Review state security deposit law
2. Calculate what's owed
3. Send written demand
4. Reference state law penalties
5. File small claims if ignored

Penalty Damages

• Many states impose penalties
• Often 2x or 3x deposit amount
• May include attorney fees
• For bad faith retention

Event and Service Deposits

Contract Review

• Check refund/cancellation terms
• Note deadlines for cancellation
• Look for "non-refundable" language
• Understand what triggers forfeiture

When You Can Get It Back

• Service not provided
• Cancelled within refund period
• Provider breached agreement
• Service materially different from promised

Fighting Non-Refundable Terms

• May be unconscionable in some cases
• Check if properly disclosed
• Provider's failure may override
• State consumer laws may help

Business Closure Situations

If Business Closes

• File credit card chargeback immediately
• Check for bankruptcy proceedings
• File as unsecured creditor
• Report to state AG

Recovery Priority

• Credit card dispute (best option)
• State bond/recovery fund (if licensed)
• Bankruptcy claim (often minimal recovery)
• Small claims (if owner reachable)

Utility Deposit Recovery

Your Rights

• Return when service ends in good standing
• Apply to final bill
• Interest in some states
• Written accounting required

If Not Returned

1. Contact utility customer service
2. Request written explanation
3. File with state utility commission
4. Small claims for unresolved disputes

Taking Action

Demand Letter Essentials

• Specific deposit amount
• Date deposit was paid
• Why you're entitled to return
• Relevant law citations
• Deadline for response
• Consequences if not paid

Small Claims Court

• Effective for deposit disputes
• Low filing fees
• No lawyer needed
• Quick resolution
• May get penalty damages

What to Bring to Court

• Contract/lease
• Proof of deposit payment
• Move-in/move-out photos
• Demand letter and response
• State law printout
• Damage calculation

Prevention Tips

Before Paying

• Get refund terms in writing
• Document condition (photos/video)
• Keep all receipts
• Pay by credit card when possible
• Read the fine print

Before Leaving/Ending Service

• Document final condition
• Request walk-through inspection
• Get written acknowledgment
• Provide forwarding address
• Follow all required procedures