At the end of the lease term, if the property is in good condition, you must refund the security deposit.A deposit is not income until it is forfeited.

Before you buy not after signing to buy.WO Jay H blessing i would just forfeit the EMD!

This is to say that they might forfeit one of your units for the peace of mind of signing an earlier lease somewhere else (perhaps because their parents might want them to). 

There is a "Security Deposit Forfeit". 

My line of thinking is that they will be signing a 1 year lease and I will be holding the deposit for 1 year anyhow I may as well get a little interest on it.Concerns are if they break the lease early.. but most cases I think of that is the case they will be forfeiting the deposit anyway..Open to thoughts or opinions please

I’d remind the landlord of this….If the landlord misses the 21-day deadline, he forfeits the right to deduct anything.

I hereby notify you that the agreement is terminated and you forfeit all funds deposited."

If they fail to rent for any reason, they forfeit the fee.

B) New lease cannot be agreed upon and you walk away from the property -- forfeiting all the improvements which become property of the lessor?

Your standard lease agreement should mention that the security deposit can never be used to pay rent and that it's forfeited should the lease agreement be terminated before the outlined expiration date.