If the landlord willfully and wrongfully keeps a security deposit, the tenant may recover three times the amount of the security deposit wrongfully withheld, plus costs and reasonable attorneys' fees. (Under the Equipment Hazards Act, the penalty is double rather than triple the amount of the security deposit.) To these treble damages, after the one-month time period for returning the deposit expires, the tenant must send the landlord written notice of the intent to bring a lawsuit to recover the treble damages. The tenant must then wait seven days.
If the landlord fails to return the deposit within the seven-day period, the landlord's keeping of the security deposit is considered willful and the tenant can sue for treble damages. If the landlord returns the full amount of the security deposit within that seven-day period, the landlord has no liability for treble damages. Remember, at this point the landlord must return all of the deposit and cannot keep any of it for any reason. Once the landlord fails to give a written explanation within the one-month period, the landlord's right to keep any of the deposit is lost.
Even if the landlord gives the required explanation within the one-month time period, the tenant may challenge the amounts retained and under some circumstances may recover treble damages. The landlord may still be liable for three times the amount wrongfully withheld if the landlord did not act in good faith in keeping all or a portion of the deposit. The landlord has the burden of proving that s/he acted in good faith. The landlord does not necessarily act in bad faith simply by keeping more of the security deposit than is ultimately found to be owing. However, the amount of the discrepancy between the amount retained and amount actually owed is a factor to determining the faith of the landlord.