In the state of California, a good number of rental agreements and residential leases require a security deposit. The deposit is a lump sum of money paid upfront by a tenant prior to them moving into a rental unit.
For a landlord, collecting a security deposit from your tenant offers many benefits. They include:
- Help cover for unpaid utilities upon move-out. During the lease period, most - if not all – the utilities will be in the tenant’s name. Should they fail to pay them, the California security deposit law entitles the landlord to appropriate deductions from the tenant’s security deposit.
- Help cover excessive cleaning costs. Most leases make it clear that the tenant must leave the premises in the same condition they found it less some normal wear and tear. Sadly, not all tenants do this. If the tenant leaves the property in extreme case of uncleanliness, landlords have the right to make deductions from their deposit.
- Help cover loss in rent payments. Nonpayment of rent is a breach of the rental contract. It’s probably one of the most common problems experienced by landlords in California. Should this situation occur, landlords are entitled to part or all of the tenant’s security deposit.
- Help cover for lost rental income. Your tenant may simply choose to abandon the property. He or she may also choose to break their lease early. To recover losses associated with any of these situations, landlords may need to deduct the appropriate amounts from the tenant’s deposit.
- To cover excessive property damage. For example, unauthorized paint colors, holes in the walls, chipped countertops and broken or chipped tiles.
Here’s a Guide to California’s Security Deposit Law
1. California Security Deposit Limit
Most states limit how much a landlord can charge a renter for a security deposit. In the state of California, the security deposit limit depends on whether the said residence is furnished or not.
When furnished, the limit is capped at a maximum of three month’s rent. When unfurnished, the limit is capped at a maximum of two months’ rent.
In addition, if the tenant has a waterbed, the law permits landlords to charge an extra 50% of the rent.
2. Nonrefundable Fees
By definition, all deposits are refundable. However, some states allow landlords to charge non-refundable deposits as well. An example of a nonrefundable fee could be a fee for having a pet in the property.
So, does the state of California allow non-refundable fees? No, it doesn’t. All deposits are refundable to tenants at the end of their lease term.
3. Storing a Tenants Deposit in California
Some states may have rules regarding how landlords should keep a tenant’s deposit. For example, in Florida, landlords can choose to post a surety bond for the amount of deposit. They can also choose to keep it in either an interest or non-interest-yielding account.
However, in California, there are no specific rules that landlords must heed to when storing a tenant’s security deposit.
4. Written Notice after Security Deposit Receipt
California landlords are not required by law to write a notice to their renters regarding receipt of their deposit.
5. Reasons to Withhold a Tenant’s Security Deposit in California
Under certain conditions, landlords can keep all or a portion of a tenant’s security deposit. In the state of California, common reasons include:
- To replace damaged or lost furniture or personal property
- To make repairs
- For the purposes of cleaning the unit
- To compensate for unpaid rent
Although, in accordance with California’s renters’ rights concerning security deposit the landlord cannot keep the deposit to cover conditions that existed before the tenant moved into the unit. Ordinary wear and tear should not be included in reasons to deduct from the deposit. Examples of normal wear and tear include:
- Fading paint from sunlight
- Cracks in the walls caused by settling
- Scratches and light watermarks
- Dirty grout surrounding the tiles
6. A Walk-Through Inspection
A walk-through inspection is required under California landlord-tenant law. The inspection helps to check the property's condition. Prior to conducting the inspection, California landlords must give the tenant 48 hours' written notice.
7. Security Deposit Refund in California
California’s security deposit law state that once the tenant vacates, landlords have 21 days to return all or part of the tenant’s deposit. If there are any deductions, the landlord must provide an itemized list of deductions alongside the returned deposit.
8. Change in Property Ownership
The outgoing landlord has two options in this regard:
One, to return the deposit amount, fewer deductions back to the renter. Then, he or she must notify the incoming landlord of the same.
And two, to transfer the deposit to the new owner. The outgoing landlord must then notify the renter in writing of the same. In addition, the notice must state the name and contact address of the new owner.
There you have it. A guide to the security deposit law in California. Need more help? If so, please contact a qualified California landlord-tenant attorney.