As a landlord, it's important to require your tenants to pay a security deposit as part of the move-in process. There are lots of advantages to collecting security deposits, including helping you cover:
- Missed rent payments: One of the most common problems experienced by landlords in California is nonpayment of rent. If your tenants fail to pay their rent, you're entitled to deduct the amount from the tenant's security deposit.
- Excessive cleaning costs: In California, tenants are expected to return the rental property to the landlord with the same level of cleanliness as when they moved in. If the property is not as clean as at the beginning of the tenancy, landlords are allowed to deduct the cleaning costs from security deposits.
- Excessive property damage: Any damage that is not considered part of normal wear and tear should be charged to the account of the tenant. In addition, any alterations made to the property without the approval of the landlord can also be deducted from the security deposit.
- Unpaid bills upon move out: In most cases, the tenants will be responsible for paying the utilities during the term of the lease. However, if the tenants have unpaid utilities when they move out or are evicted, the security deposit may be used to cover these bills.
California Security Deposit Law: Overview
Security Deposit Limit
Most states impose a limit on how much security deposit landlords can require from their tenants. In the state of California, the security deposit limit depends on whether the said residence is furnished or not.
- Furnished units: If the rental home is furnished, California landlords may charge a security deposit equivalent to up to three months' worth of rent.
- Unfurnished units: For rental properties that are not furnished, the maximum limit landlords can charge as a security deposit is up to two months' worth of rent.
Tenants who are active service members. If the tenants are active members of the military, California landlords may only charge a security deposit equivalent to one month of rent for unfurnished homes and two months of rent for furnished rental units.
Pet deposit. Under California law, landlords may require tenants an additional pet deposit. However, people with disabilities can not be required to pay additional pet deposits if their pets are used as service or emotional support animals.
Mobile home space. For mobile homes, the maximum limit for a security deposit is equivalent to one month's rent.
The state of California does not allow nonrefundable fees. All deposits should be returned to the tenants when the lease term ends. The law clearly prohibits landlords from drafting a rental agreement stating that there are nonrefundable deposits.
Storing a Tenant's Deposit in California
In some states, there are rules about how landlords should safe keep a tenant's deposit. For instance, Florida landlords can choose to post a surety bond for the amount of the security deposit. They can also choose to keep it in an interest or non-interest-yielding bank account.
However, in California, there is no specific statute that landlords must follow when it comes to keeping a tenant's security deposit.
Written Notice after Security Deposit Receipt
Under **California landlord-tenant law**, landlords are not required to write a notice to the tenants regarding the receipt of the security deposit.
Reasons to Withhold a Tenant's Security Deposit in California
According to the law, landlords can keep all or a portion of a renter's security deposit under certain conditions. In the state of California, landlords can use a tenant's security deposit:
- To compensate for missed rent payments.
- To cover the cost of repairs due to damages past normal wear and tear caused by tenants.
- To pay for the cleaning costs if the rental unit is not as clean as it was during the start of the tenancy.
- To replace damaged or lost furniture and to restore the property in accordance with the provisions of the rental agreement.
Keep in mind that, in accordance with California's renters' rights concerning security deposits, the landlord cannot keep the deposit to cover conditions that existed before the tenant moved into the unit.
A Walk-Through Inspection
A walk-through inspection is required under California landlord-tenant law. The inspection helps to check the property's condition so landlords can give tenants a chance to fix any issues. California landlords should inform tenants about the inspection within a reasonable time. The schedule of the inspection should not be earlier than two weeks before the end of the lease.
Security Deposit Refund in California
In California, landlords have 21 days to return all or part of the tenant's deposit after the tenants move out of the property. If there are any deductions, the landlord must provide a written, itemized list of deductions upon returning the remaining security deposit.
Change in Property Ownership
If the California landlord sells or transfers the ownership of the rental property before the lease term ends, the outgoing landlord has the following options:
- The landlord may return the deposit to the tenant just as he would when the tenancy ends, less any eligible deductions. The outgoing landlord must notify the new landlord that the deposit was returned to the tenant.
- The landlord may transfer the security deposit to the new owner. The outgoing landlord is required to notify the tenants in writing about the transfer of the security deposit. The landlord should also state the name and contact address of the new owner in the notice.
If you have specific questions about the security deposit law in California, it's best to hire the services of a qualified California attorney. Alternatively, you can also seek help from a knowledgeable property management company. If you're looking for a rental property manager in California, reach out to Castle Companies at (925) 328-1240 and we'll be happy to serve you.
Disclaimer: This blog should not be used as a substitute for legal advice from a licensed attorney in your state. Laws change, and this post might not be updated at the time of your reading. Please contact us for any questions you have in regards to this content or any other aspect of your property management needs.