Property Management Blog

Guide to the Security Deposit Law in California

Pinnacle Property Management - Monday, October 15, 2018

In the state of California, a good number of rental agreements and residential leases require a security deposit. The security 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 deposit. 
  • Help cover excessive cleaning costs. A lease makes it clear that the tenant must leave the premises in the same condition they found it less some ordinary wear and tear. Sadly, not every tenant does this. If the tenant leaves the rental 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, part or all of the tenant’s security deposit may be used to cover for a month's rent loss.
  • Help cover for lost rental income. Your tenant may simply choose to abandon the rental property. He or she may also choose to break their lease early. To recover losses associated with any of these situations, a landlord can 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 tenant for a security deposit. Under California law, 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 unit. 

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 Tenant's Deposit in California

Some states may have rules regarding how landlords should keep a tenant’s deposit. For example, in Florida, a landlord may choose to post a surety bond for the amount of deposit. A landlord may also choose to keep it in either an interest or non-interest-yielding account. 

However, Under California law, 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 a tenant regarding receipt of their deposit. 

5.   Reasons to Withhold a Tenant’s Security Deposit in California

Under certain conditions, a landlord may 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. Then, the inspection can be done.

7.   Security Deposit Refund in California

California’s security deposit law state that once the tenant vacates, landlords have 21 days to give all or part of the deposit back to the tenant. If there are any deductions, the landlord must provide an itemized list of deductions alongside the returned deposit. 

8.   Change in Property Ownership

Under California law, the outgoing landlord has two options in this regard:

One, to return the deposit amount, fewer deductions back to the tenant. 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 tenant in writing of the same. In addition, the written notice must state the name and contact address of the new owner. 

Bottom Line: Security Deposit Laws in California

There you have it. A guide to the security deposit law in California.

A California landlord can charge a security deposit and collect the money from their tenant. However, when handling the security deposit, be sure to follow all the California laws. This will ensure you avoid lawsuits or being sued by your tenant in a small claims court.

Remember, a landlord can deduct from the security deposit if there are property damages caused by the tenant that are beyond normal wear and tear, or the tenant has failed to pay rent.

Need more help? If so, please contact a qualified California landlord-tenant attorney. Alternatively, contact us! We can help a landlord and tenant with any needs they may have. 

Disclaimer: This blog about security deposit laws and deductions in California is in no way a substitute for professional legal advice. Also, keep changing and it may not be up to date at the time of your reading. If you still have questions or want further help, please get in touch with us. 

Pinnacle Property Management
CA BRE # 01905815
22700 Crenshaw Blvd.
Torrance, CA 90505
Ph: (310) 530-0606
Fax: (310) 626-9786

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