Property Management Blog

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. 

Landlord-tenant laws help protect both parties involved in a rental agreement. In California, these laws are outlined in the “Guide to Residential Tenants’ and Landlords’ Rights and Responsibilities.”

They are very detailed and can be even more complex in cities that have rent-control laws. 

By understanding these laws, both landlords and tenants should be able to deal with many legal questions and issues without requiring a lawyer. 

An Overview of the Landlord-Tenant Laws in California

1. Tenant Privacy and California Landlord’s Right to Enter the Dwelling

The landlord can only enter the tenant’s premises for specific reasons. Such reasons include:

• Pursuant to court order
• When the tenant has vacated or abandoned the premises
• To show the rental to prospective renters, mortgagees or purchases
• To make agreed repairs
• To make the necessary repairs
• In an emergency

In California, landlords have the right to enter the tenant’s premises during normal hours and only after notifying the tenant. 

2. The Condition, Maintenance, and Repairs

It is the landlord’s responsibility to keep their rental units habitable. But what exactly is a habitable premise? Here are some characteristics that fall under habitable premise in California property laws:

• Conforming locks
• Floors, stairways, and railings in good maintenance and repair 
• Adequate receptacles for garbage
• Building, grounds, and appurtenances clean and free of vermin at the time of renting
• Electrical, lighting and heating facilities are up to code and in good condition
• Water supply up to code and provides hot and cold water
• Plumbing is up to code and in good condition
• Effective weatherproofing of the roof, exterior walls, and unbroken windows

3. California’s Housing Discrimination Laws 

California’s rental law prohibits housing discrimination against renters based on certain characteristics. 

According to the Fair Housing Rules, it’s illegal to discriminate against a renter based on disability, the source of income, gender identity, gender, sexual orientation, medical condition, familial status, age, ancestry, national origin, marital status, sex, religion, color or race. 

Besides the federal Fair Housing Rules, the following are state laws that landlords must adhere to: 

• Unruh Act (Civil Code 52-53)
• Handicapped Rights (Civil Code 54)
• Senior Citizen Housing (Civil Code 51.3)
• Fair Housing Act (Rumford) Govt. Code 12955)

4. Security Deposits

California only recognizes a unitary security deposit. The law doesn’t distinct between the types of deposits. Pet deposits, rental deposits and more all get grouped together. 

In California, a security deposit is defined as any advance payment to the landlord to be used to:

• Fix damage to specified landlord personal property in the custody of the renter where the rental agreement so provides. 
• Repair damage to the property exclusive of normal wear and tear.
• Clean the premises upon vacation by the renter.
• Remedy defaults in rent payments.

5. Required Landlord Disclosures

California’s landlord-tenant laws state that at the start of the tenancy, landlords must make certain disclosures to renters. This should be in the form of writing, usually printed in the lease agreement. 

The disclosures are as follows:

• Landlords of single-family homes and multifamily properties (4 units or less), who have received a notice of default for the rental property that has not rescinded, must disclose this fact to potential renters before they sign a lease.
• If the landlord prohibits or limits the smoking of tobacco products on the rental property, the lease or rental agreement must include areas where smoking is allowed.
• Landlords or their agents who have applied for a permit to demolish a rental unit must give written notice of this fact to prospective tenants, before accepting any deposits or screening fees. 
• Prior to signing a rental agreement, California landlords must provide written disclosure when they have reason to know, that mold exceeds permissible exposure limits or poses a health threat. 
• Prior to signing a rental agreement, landlords must disclose whether gas or electric service to tenant’s unit also serves other areas. Also, they must disclose the manner by which costs will be fairly allocated. 
• Landlords must include the following passage in their rental agreements: “Notice: Pursuant to Section 290.46 of the Penal Code, information about specified registered sex offenders is made available to the public via www.meganslaw.ca.gov. 

6. Renters Rights to Withhold Rent in California

If a landlord fails to take care of important repairs, tenants have several options. For example, they can:

• Exercise their right to “repair and deduct”
• Call state or local health inspectors
• Sue the landlord
• Move out without notice
• Withhold rent

7. Small Claims Lawsuits in California

Conflicts over security deposits are fairly common. Issues often arise against landlords who have failed to return the deposit at all or who unfairly withheld it from their renters. 

California tenants have the right to sue landlords in small claims court for the return of their deposit, up to a dollar amount of $10,000. 

Please note that this summary is not intended to be legal advice. Neither is it exhaustive of all relevant California Landlord-Tenant Laws. 

Evicting a tenant is an unfortunate part of being a landlord. The eviction process is time-consuming and often times costly. But sometimes, it’s the only way to get rid of a troublesome tenant. 

In California, the law requires you to legally terminate a tenancy before evicting a renter. This means “self-help” evictions should not be practiced. You must follow California’s eviction process. Even if the tenant is months behind on rent, without a court order, you cannot:

• Change the locks;
• Remove outside windows or doors;
• Cut off the utilities, like water or electricity;
• Lock the renter out;
• Get rid of the tenant’s personal property; or worse of all
• Physically remove the tenant. 

What’s the Eviction Process in California? Well, Here’s a Guide.

The Rationale for the Rules

When evicting a tenant in California, landlords must carefully follow all the rules and procedures required under the state’s rental laws. If not, the eviction lawsuit may fail. While the eviction process can seem burdensome to you, the rules and procedures are there for a reason. 

Notice for Lease Termination with Legal Cause

A California landlord can evict a renter for various reasons. Such reasons include:

• Nonpayment of rent
• Property damage
• Violation of the terms of the lease agreement
• “Holdover” tenant
• Illegal use of the property
• Illegal drug manufacturing
• Causing significant disturbance to other neighbors and tenants

Prior to terminating the tenancy, you must first serve the tenant with an eviction notice.

The type of eviction notice used is determined by the reason for the termination. Generally, there are three types of eviction notices given in California. They are:

• 3-Day Notice to pay due rent. This notice gives the renter two options: to pay or leave. If the tenant doesn’t act within three days, then you can file an eviction lawsuit against them in court. 
• 3-Day Unconditional Quit Notice. Unlike the first notice, this one doesn’t give the tenant an option to remedy the lease violation. It simply requires the tenant to leave. If the renter doesn’t leave within three days, then you can file an eviction lawsuit against them in court. 
• 3-Day Notice to Cure. This notice gives a tenant three days to correct a lease violation. For example, to cease causing disturbance to other tenants. If the tenant doesn’t do so within three days, you can file an eviction lawsuit against them in court. 

Notice for Lease Termination Without Legal Cause

Without a cause, procedures for terminating a lease depend on the length of the tenancy. If it’s a monthly lease, the landlord-tenant laws in California require you give the tenant a 30-day notice to end their tenancy. 

If the term of the lease is fixed, you must wait until the lease period is over to end the tenancy. Both notices must inform the renter that you won’t be renewing their lease for another term.  

Tenant Eviction Defenses in California

A defense is a reason why you (the petitioner) shouldn’t win the case. A tenant may claim;

• You waited far too long to file the lawsuit against them
• You refused to take rent
• Monthly rent being requested isn’t the one on the lease agreement
• You overcharged the rent
• The property wasn’t habitable

Removal of the Tenant

If the renter fails to act on an eviction notice within the time specified, you can go to the court and file an unlawful detainer suit. To successfully file the lawsuit, you will require the following forms. 

First, you need an unlawful detainer complaint, a civil case cover sheet, and a prejudgment right of possession form. 

Next, you will need to serve the tenant with the summons and compliant. In California, the tenant has five business days to file a “response” to the court to challenge the lawsuit. 

If the tenant doesn’t respond, then you may win by default. In California, if the tenant does respond, then they have the right to a hearing date. 

At the hearing date, the judge will give both you and the renter a chance to present your cases. As such, you should collect as much evidence as possible. For example, records of violations, eviction notices, and the lease agreement. 

If you win, then the court will issue you with a Writ of Possession. This document gives the sheriff the power to forcefully evict the tenant out of your California property if they fail to move out voluntarily within five days after the judgment. 

Depending on the circumstances and the lease agreement provisions, the court may also order the renter to pay a $600 penalty, attorney fees, and any unpaid rent. 

Sometimes, the renter may leave some personal belongings behind. In some municipalities, you may need to notify your renter of the items. In others, though, you may sell or dispose of them. 

The California eviction process isn’t as easy as just telling your tenant to vacate your property. You must follow a certain defined process. Hopefully, this guide has been informational in this regard. 

If you have specific questions, hire the services of a qualified California attorney. Alternatively, you can seek help from a knowledgeable property management company. 

Once you have invested in a rental property, the responsibility of maintaining and running the property can quickly become overwhelming. For many Owners, the logical solution is to hire a Property Management company to oversee their rental property. But is this the right decision for you? Here are the top 10 reasons to consider why you should hire a property management company and how the benefits far outweigh the costs.

1) Rent Collection: A professional property management company  have systems and strategies to improve rent collection and on-time rent payments. This allows you to ensure swift and consistent rent collection.

2) Local Knowledge of Rental Rates: Property Managers have extensive local knowledge of rents and the ability to determine the highest rental rate possible for your property. With the internet and the ability to do large scale searches for rental properties, potential tenants know if your property is overpriced, even by $25. Overpriced properties sit empty while other properties get rented. Knowledge of rental rates is a key factor to fast rentals and quick cash flow.

 3) Tenant Screening: A Property Manager requires a detailed written application from each adult with photo identification. Additionally, property managers will run criminal, social security and public notice (bankruptcy or judgments) searches to determine if the application is accurate. Property Managers will also call past and present employers, landlords and other references. Property managers have set requirements and standards for accepting or declining an applicant and thereby ensuring you comply with fair housing rules and other local and state regulations.

4) Marketing Expertise: Property Manger's have years of experience in how to best market your properties so they are rented in the quickest time possible. PM's use both offline and online marketing to maximize your properties' exposure and find qualified tenants quicker. Most Property Managers utilize 10, 20 or even 30 different techniques to rent a property quickly which reduces your carrying cost of a vacant property.

5) Property Law and Regulations: Property Manger's have extensive and up-to-date knowledge of property laws and regulations and will assist you in making sure you are in compliance with your local, state and federal rules and regulations. These rules and regulations include complying with fair housing regulations, the Americans with Disabilities Act and other applicable local, state and federal laws. Avoiding one law suit will more than pay for any PM's fees many times over.

6) Tested and Reliable Professionals: Residential property management companies will already have vetted numerous vendors, suppliers and contractors to make sure they provided good quality work at reasonable prices. Failure to properly vet these professionals can be a costly mistake. Many owners overlook this function because they do not know how to do it or because it is a time consuming and laborious process.

7) Inspection Reports: Property Mangers perform property inspections before, during and after a tenancy. Additionally, most PM's will perform routine property inspections at least every 180 days. Your PM should be responsible for preparing frequent written inspection reports for each of your properties. Faults in your property that are found quickly can be resolved before they become expensive items of disrepair.

8) Financial Records: Property Mangers will provide detailed income and expenses reports as well as cash statements every month saving you the bookkeeping headache. 

9) Emergency Calls and Shield You from Tenants: A property management company will shield you from emergency maintenance calls and tenant headaches. Imagine never having to deal with late night plumbing calls.

10) Low Costs:  Most Property managers charge around 6% to 10% of the monthly rent collected. Assuming a monthly rental rate of $1200 per month that is a fee of $72 to $120 per month. Having a management company will only cost a few dollars a day.