Yes, I would write back asking for its return. Legal action is a possibility, though I don't know if the amount would make it worth it.
send your letter certified mail, return receipt requested
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Dear landlord is refusing to return security deposit:
Your lease likely provided that the security deposit would be returned to you in full with earned interest unless the premises were returned to the landlord in a condition requiring repair to damage beyond ordinary use (damage beyond ordinary wear and tear.)
It would have helped to have had he landlord sign off on the day you moved that all was in order and no damage was observed.
Remind the landlord in writing that he accepted the condition on the inspection date. Send your letter to the landlord, with a duplicate copy to yourself, by certified mail and by regular mail with a certificate of mailing.
If you do not receive your security, you may initiate a Small Claims Court claim for the return of the security deposit.
The answer provided to you is in the nature of general information. The general proposition being that you should try to avoid a bad outcome if you can.