HUD Handbook 4350.3 § 6-18
Refunding and Use of the Security Deposit (HUD Occupancy Handbook 4350.3 REV-1 CHG-4)
Operative Text
A. In order to receive a refund of the security deposit, a tenant must provide the
owner with a forwarding address or arrange to pick up the refund. [24 CFR
880.608(c), 881.601, 883.701, 891.435(b)(2), 891.635, and 891.775]
NOTE: The regulations do not require the tenant to provide this type of
notification to the owners in RHS 515 properties with Section 8 and properties
with Section 8 LMSA and Section 8 PDSA. However, state law typically requires
owners to attempt to refund a tenant’s security deposit.
B. Subject to state and local laws, an owner may use the tenant’s security deposit
as reimbursement for any unpaid rent or other amounts the tenant owes under
the lease.
C. Within 30 days after the move-out date (or shorter time if required by state and/or
local laws), the owner must either:
1. Refund the full security deposit plus accrued interest to a tenant that does
not owe any amounts under the lease; or
2. Provide the tenant with an itemized list of any unpaid rent, damages to
the unit, and an estimated cost for repair, along with a statement of the
tenant’s rights under state and local laws.
a. If the amount the owner claims is less than the security deposit
plus accrued interest, the owner must refund the unused balance
to the tenant.
b. If the owner fails to provide the list to the tenant, the tenant is
entitled to a full refund of the tenant’s security deposit plus
accrued interest.
NOTE: State laws may also have requirements regarding itemizing
damages. When a specific federal housing program does not require an
itemized list (as is the case for properties with Section 8 LMSA and
Section 8 PDSA), owners must be aware of any state or local law that
obligates an owner to provide the tenant with an itemized list of damages.
D. If a disagreement arises concerning the reimbursement of the security deposit to
the tenant, the tenant has the right to present objections to the owner in an
informal meeting. The owner must keep a record of any disagreements and
meetings in the tenant file for a period of three years for inspection by the HUD
Field Office or Contract Administrator. These procedures do not preclude the
tenant from exercising any rights under state and local law.
NOTE: The regulations for RHS 515 properties with Section 8 and properties
with Section 8 LMSA and Section 8 PDSA do not require an owner to meet with
the tenant or keep a record of the meeting or any disagreements.
E. If the security deposit is insufficient to reimburse the owner for any unpaid rent or
other amounts that the tenant owes under the lease, the owner may be able to
claim reimbursement from the HUD Field Office or Contract Administrator.
F. Any reimbursement from HUD received by the owner must be applied first toward
any unpaid tenant rent due under the lease. Additionally, no reimbursement may
be claimed for unpaid rent for the period after termination of the tenancy.HUD Handbook 4350.3 REV-1 CHG-4 § 6-18 establishes the rules governing how security deposits must be handled when a tenant moves out of a federally assisted housing unit. Owners are generally required to return the full deposit plus accrued interest within 30 days of move-out, or provide an itemized written accounting of any deductions; failure to provide that itemized list typically entitles the tenant to a full refund. If a dispute arises, the tenant has a right to an informal meeting with the owner, and the owner must retain records of any disagreements for three years for potential review by HUD or a Contract Administrator. State and local laws may impose additional or stricter requirements on top of these federal standards.
Plain English — not legal advice.
Operators of federally assisted housing covered by HUD Handbook 4350.3 REV-1 CHG-4 § 6-18 generally maintain clear move-out procedures that include tracking the 30-day refund deadline and documenting any deductions with an itemized list of unpaid rent, unit damages, and estimated repair costs. Compliant operators return any unused balance of the deposit along with accrued interest when claimed amounts fall short of the total deposit held. When a deposit dispute arises, operators typically hold an informal meeting with the tenant and preserve all related records in the tenant file for at least three years, as required for HUD Field Office or Contract Administrator inspection. Owners should also stay current with applicable state and local laws, which may impose shorter deadlines or additional itemization requirements beyond the federal baseline.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Under HUD Handbook 4350.3 REV-1 CHG-4 § 6-18, tenants in most federally assisted housing programs are entitled to receive their full security deposit plus accrued interest within 30 days of moving out, provided they do not owe amounts under the lease and have given the owner a forwarding address or arranged to collect the refund. If an owner fails to provide a proper itemized list of deductions within that window, the provision generally entitles the tenant to a full refund of the deposit and interest. Tenants who disagree with a deduction have the right to request an informal meeting with the owner, and may also pursue any additional remedies available under state and local law. Tenant-rights organizations and HUD-approved housing counselors can help tenants understand how these federal protections interact with state-level rules in their area.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 25, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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