Can your landlord refuse to return your security deposit without any damage? Know your rights as a tenant

A security deposit can become a point of dispute when a tenant moves out, particularly if the landlord deducts money for repairs, painting or maintenance. But not every expense can necessarily be passed on to the tenant.

Here is what tenants should know about security-deposit deductions, refund timelines and the legal remedies available if the landlord refuses to return the money.

Can a landlord withhold a tenant’s security deposit without damage?

A security deposit is meant to protect the landlord against actual financial loss arising from the tenancy; it is not an automatic charge for vacating the property.


“The deposit is not an automatic exit fee and cannot be used to improve or upgrade the property after the tenant leaves,” says Alay Razvi, Managing Partner, Accord Juris.

“Deductions are only lawful for unpaid rent or pending utility bills, actual damage caused by or attributed to any action of the tenant (beyond normal wear and tear) and repair costs specifically written into the rental agreement,” says Gaurav Dasgupta, Partner at Khaitan & Co.

A landlord cannot deduct money from the security deposit for normal wear and tear, routine maintenance, or charges not agreed upon in the rental agreement, he adds.

Under Section 108(m) of the Transfer of Property Act, 1882, a tenant should return the property in substantially the same condition, subject to deterioration caused by everyday use.

This means issues like fading paint, minor scratches, normal flooring wear and ageing of fixtures and plumbing would generally not be treated as damage caused by the tenant. Any deduction should therefore have a genuine basis and, where applicable, be supported by repair bills or other documentation rather than being an arbitrary amount.

Also read: Canadian landlord asks tenant to vacate India property for personal use; Punjab & Haryana High Court rules in tenant’s favour; know why

When should the landlord return the security deposit?

The landlord should return the security deposit after the tenant vacates the property, hands over the keys and the premises have been inspected, after adjusting only for legitimate deductions.

“The rental agreement may provide a reasonable reconciliation period, commonly 15 to 30 days, for pending utility bills,” says Razvi.

Tenants can protect themselves against disputes by arranging a joint inspection before leaving, taking dated photographs and videos of the property, recording electricity and water meter readings, clearing outstanding dues and obtaining written acknowledgement of key handover and vacant possession.

If the refund is delayed, the tenant should make a written demand mentioning the deposit amount, date of vacating and proof of payment, and give the landlord a reasonable deadline for repayment.

What can a tenant do if the landlord refuses to return the deposit?

The first step should be to ask the landlord for a written, itemised explanation of the deductions and supporting bills or documents.

If a landlord or licensor withholds the security deposit without a valid contractual or documentary basis, the tenant or licensee can challenge the deduction and seek recovery of the amount through appropriate civil proceedings.

“As a practical first step, the tenant or licensee should send a legal notice to the landlord demanding repayment of the withheld deposit within a specified period,” says Divya Alexander, Advocate, D. M. Harish & Co. LLP, Advocates

A legal notice gives the landlord an opportunity to resolve the dispute and creates a written record that may be useful if further action becomes necessary.

Depending on the applicable state law, the tenant may also approach the relevant Rent Controller or Rent Control Tribunal to seek recovery of a deposit that has been wrongfully withheld.

“In addition, a civil action for recovery of money may be filed before the appropriate Small Causes Court or Civil Court in accordance with the Code of Civil Procedure, 1908,” says Alexander.

A tenant or licensee may also explore remedies under the Consumer Protection Act, 2019, particularly when the circumstances fall within the scope of a consumer dispute. Pre-litigation mediation may be considered as a means of attempting to resolve the dispute without immediately resorting to formal litigation, he adds.

Keep these documents when vacating the property

Tenants should retain the rental agreement, proof of security-deposit payment, rent and utility receipts, photographs and videos of the property, inventory records, meter readings, key-handover acknowledgement, and relevant emails, messages and notices.

These records can help establish the condition of the property at the time of handover and challenge deductions that are not supported by the agreement or actual expenses.