Once the lease is over, it is over. You're not bound by a 60 day notice period in an expired contract. If you're a month to month tenant, all you have to give is a 30 day notice.
As for the security deposit, the landlord is technically correct. A security deposit is any advance rental payment other than an advance for rent or a deposit for a key or any special equipment. A security deposit remains the tenant's property but the landlord holds a security interest in it. Security deposits must be kept in an escrow account in a Connecticut bank.
The money is supposed to be used to make necessary repairs to the space that are over and above normal wear and tear.
However, if there are no damages to repair, there's really no reason that the landlord couldn't accept it.
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