To avoid disputes at the end of the tenancy, the landlord and the tenant should, at the move-in, inventory the furnishings and condition of the unit, and co-sign such a list. An example form is located here on RentLaw.com

The tenant may not use the deposit to cover the last month’s rent, although the landlord may apply it toward unpaid rent. A deposit, by definition, is refundable. The landlord must have suffered actual losses in order to withhold any part of the deposit.

The landlord has 30 days from the end of the tenancy in which to return the deposit or an itemized list of deductions plus any balance remaining from the deposit. The tenant must provide a forwarding address where he or she may receive this accounting.

If a landlord does not send an itemized statement and deposit balance to the tenant within 30 days of the date the rental agreement is terminated or the tenant moves out, whichever is later, the landlord forfeits all rights to any of the deposit and to take further legal action against the tenant in a court of a law. Thus, even if the tenant has incurred $10,000 in damages, the landlord loses the right to claim the damage if he or she has not acted within the 30 days. If the landlord fails to provide an itemized statement and return the balance of the deposit within the required time, the tenant may sue the landlord to recover the entire deposit, plus attorney’s fees and court costs, and in some cases, civil penalty in the amount of $250. As noted above, the tenant is required to leave the landlord a forwarding address. If the tenant fails to do so, the landlord must send the balance of the deposit and itemized statement to the tenant’s last known address.