How do I handle the deposit when replacing 1 of 3 tenants?

[Corbin H.]

I rented my first property starting in February of 2014 and we are coming up on the end of the lease.  1 of the tenants has notified me that he is going to move out at the end of the lease, but the other 2 want to stay.  They are currently looking for a new person to take his spot, and it looks like they are going to fill out an application.  

My question is, if this person is acceptable and we let him move in and have the 3 sign another year lease, how do we handle the deposit for the tenant moving out and the one moving in?  This is probably a very basic question, but I am new to this so any help is appreciated.  

[J Scott]

Will you be renewing the existing lease?  Or will you be signing a new contract?

If there will be changes in those signing the contract, I'll assume you plan to sign a new contract.

That being the case, my recommendation would be to return the security deposit on the completed lease and collect a new security deposit on the new lease.  You probably also want to do a walk-through of the unit prior to returning the deposit to ensure that there is no damage that you should be collecting for (you don't want the new guy to be paying for damage done before he arrived).

I'm not an attorney (nor am I a tremendously experience landlord), so take that for what it's worth...