Security Deposits in CA – Things You Should Know 

Securing a deposit for your rental property will to help protect against specific cases of a tenant’s lease violation. A security deposit can be used by the landlord to cover certain instances of damage done to the property, for cleaning it back to its condition prior to rental (if the property is left with excessive filth), to replace keys, or to cover back rent owed. Though often collected together, the deposit is separate from any charges for advanced rent, such as the “last month,” and there are a number of rules to keep in mind when dealing with a deposit.

Security deposits in California cannot be nonrefundable. The security deposit is the tenant’s property, less allowed deductions, and must be stored by the landlord. There is no requirement in California for security deposits to be kept in a separate account, or for the amount to earn interest.

Landlords in California are allowed to charge up to two months’ rent as a security deposit for an unfurnished residential unit, and three months rent for a furnished residential unit. One-half months’ rent can be added if a waterbed will be kept onsite. There is no limit to the deposit amount that can be required for commercial property rentals.

Walk-Through Inspection

An inspection of the property prior to lease-end can be requested by either the tenant or landlord. If making the request as a landlord, be sure it is in writing and sent with enough time for the tenant to respond if they are not interested in the inspection. While not a requirement, a walk-through inspection serves the purpose of notifying the tenant of all repairs and/or cleaning that needs to be completed in order for the entire security deposit to be returned to the tenant. If a walk-through inspection is being completed, the tenant must be given 48-hours notice before the inspection (this is different than any other occasion where 24-hours notice is necessary before accessing the rental). If a walk-through inspection has been completed, the tenant cannot then be charged for work to be done which was not included on the inspection report.

The lease for your property rental should include details about the security deposit and terms for its return, including, but not limited to:

– Tenant is responsible for the full lease term. If early-termination rules and/or requirements are available, they should be documented in the lease as well, and the tenant will be required to satisfy those terms instead.

– All rent and fees (including utilities) have been paid in full by the tenant.

– Keys and other items provided are returned.

– The tenant’s items have been removed entirely and the property has been cleaned to its original condition upon renting.

About Wear and Tear

The tenant is not responsible for damage that is considered “normal wear and tear,” that is, damages that are attributed to the deterioration of a property caused by normal use. The nature of damages that the tenant can be billed for are generally those that were avoidable by the tenant and/or caused by their negligence or misuse. For example, the tenant is not responsible for the air conditioning handler in their attic leaking; however, they are responsible for any structural damages to the ceiling caused by not reporting the leak. It’s important that tenants report damage as soon as possible, and the requirement to do so (generally within 24-hours is standard) should be included in their lease. Having the tenant complete a walk-through to document any pre-existing damages before move-in will give you a record of the property’s condition at the time it was rented.

If Sold While Renting

If the property is sold while rented, the tenant will need to be notified in writing of the new owner’s name, address, and phone. Both the new owner and the tenant will also need to be notified in writing of the amount of the security deposit, along with any deductions that have already been taken.

When a Tenant Moves

The security deposit must be returned within 21 days of the tenant vacating. If not returning in full, you must provide a written document outlining why all or part of the security deposit will be retained including an itemized list of charges, receipts for repairs, and any remaining part of the deposit.

For covered expenses (outside of normal wear and tear, and conditions that existed before the tenant began renting), collecting a security deposit can help protect against unexpected damage or expense caused by a tenant’s violation of their lease.

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