Do you require your California tenants to pay a security deposit as part of the move-in costs? If you do, then you need to familiarize yourself with the state’s security deposit laws.
These laws dictate a number of things you must do when handling a tenant’s security deposit. Including, how much you can charge as security deposits, what deductions you can make, and when you must return it after the tenant moves out.
Failure to follow these strict sets of rules that relate to security deposits that can lead to significant penalties for landlords, you may have to pay the tenant up to 2X the security deposit amount, plus small claims court and attorney fees.
The following is a basic overview of California security deposit laws.
Is There a Limit to the Amount a Landlord Can Charge for a Security Deposit in California?
Yes, there is a limit to the money you can ask a tenant for when it comes to security deposits. The amount of security deposit you charge a tenant will depend on whether you’re renting out a furnished or an unfurnished unit.
If you’re renting out a furnished unit, you must not exceed the equivalent of 3X one month’s rent when charging security deposits. If you charge tenants a monthly rent of $2,000, for instance, then you must not ask them for a deposit exceeding $6,000 as written in the rental agreement.
When a tenant provides their own furniture, the limit is the equivalent of 2X one month’s rent. So, that would be a maximum of $4,000 for a unit priced at $2,000 a month.
Are There Rules for How a Landlord Must Store a Tenant’s Security Deposit in California?
No! California doesn’t require landlords to store a tenant’s security deposit in any special way. This is, however, not always the case with other states and their laws about security deposits. Always check your state’s laws before storing a security deposit or returning security deposits.
Do Landlords Have to Provide Tenants with a Security Deposit Receipt in California?
No! California security deposit laws don’t require landlords to do so. But, even though there is no legal requirement, it’s a standard practice among savvy landlords.
Proper written documentation is imperative to the success of your investment properties. The documentation usually includes important information such as the security deposit amount, as well as the date it was received.
Under What Circumstances Can Landlords Make Deductions to a California Tenants’ Security Deposit?
You may be able to make deductions on a tenant’s security deposit for the following reasons:
- If the tenant defaults on a rent payment then the deposit can be used to pay unpaid rent. If the missing rent is more than a month’s rent and cannot be covered by the security deposit, a court claim may be necessary.
- If the tenant causes damage that exceeds normal wear and tear
- If the tenant fails to restore the unit to its initial condition before moving out. If this is the case, you must provide an itemized statement of the damage. If an itemized statement is not provided, you cannot claim the money.
- If the tenant commits a lease violation that leads to incurring debt
Just like most states, there is no legal limit on how much you can charge for damages. The only exception is that the charges must be reasonable.
If the tenant’s security deposit isn’t able to cover your losses, then you may want to seek additional damages from the tenant using other means. Including filing a lawsuit against the tenant.
What Is Considered Normal Wear and Tear in California?
Normal wear and tear is damage that occurs due to everyday use by a tenant. California law defines it as natural deterioration that occurs as a result of the tenant using the property as it was designed to be used.
Examples of damage resulting from normal wear and tear include faded paint, faded hardwood flooring, scratched windows, and stained bath fixtures.
Damage, on the other hand, refers to the destruction that occurs on a property due to negligence. Examples include holes in the wall, broken windows, missing tiles, a smashed bathroom mirror, and a heavily stained carpet.
What Must a California Landlord Do When Performing a Walk-through Inspection?
As a landlord, you may choose to perform a walk-through inspection before a tenant vacates the unit, especially if they were evicted. The goal would be to determine whether the tenant has caused any issues that they may need to fix before moving out, or if the security deposit will be used to cover repairs.
Make sure to follow all landlord-tenant laws during the walk-through inspection and treat all tenants equally and fairly.
If you choose to have a walk-through inspection, there are several things you must do:
- You must let the tenant know that you intend to have the inspection before they can move out.
- The tenant has a right to not agree to the inspection. If they agree, then you must conduct it no sooner than 2 weeks before the lease ends.
- You must provide the tenant with a 48-hours’ advance notice prior to the inspection date. The only exception here is both you and the tenant agree to another time.
- During the inspection, you must document any needed repairs that the tenant must complete before the final inspection.
When Must Landlords Return Their Tenants’ Security Deposits in California?
In California, landlords have 21 days to return their tenants’ security deposits. If making deductions, then you must attach an itemized statement that includes the following information.
The date when you received the deposit.
- The list of deductions, as well as the documents and receipts showing the incurred charges on things like labor and materials
- A good faith estimate of the cost of the work if the work is yet to be completed
- The remaining portion of the deposit you’re sending to the tenant
Conclusion
Most conflicts and disagreements between landlords and tenants arise from the return of security deposits. However, with a proper grasp and understanding of California security deposit laws, you can avoid conflict with your tenants.
If you have a question or need help in the management of your California property, California Realty Group can help. Get in touch today to learn more about things like a rental agreement, making an itemized statement, or what to charge for a month’s rent!
Please note that the information provided in this blog is intended for general guidance and should not be considered as a replacement for professional legal advice. It is important to be aware that laws pertaining to property management may change, rendering this information outdated by the time you read it.