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Landlord Tenant: Rules on Security Deposits in California

What is a security deposit?

A security deposit is an amount of money a tenant pays to his landlord at the beginning of a rental contract to ensure rent or damages are paid for. If the tenant violates terms of the rental contract then the landlord subtracts the appropriate amount of money from the deposit to cover the violations, before returning the remainder to the tenant when the tenant moves out. The security deposit can be used to cover things like damage to the rental property, cleaning, or rent. It can only be used to cover the tenant’s last month of rent if the landlord specifically agrees to it.

Example

Sam rents a property from Breanna. When he moves in he pays $500 for the first month’s rent and $500 as a security deposit. Sometime later, he moves out. Breanna the landlord finds a bedroom door is completely smashed and needs to be replaced. This costs Breanna $200. Breanna the landlord subtracts this amount from $500 and returns $300 to Sam the tenant.

Let’s take a closer look at how security deposits work in California.

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Breaking down security deposits in California

What are the limits on the amount of a security deposit?

Luckily for tenants, landlords can’t charge however much they want for a security deposit. There are limits on residential rental properties.

  • Residential property without furniture – the security deposit can’t be more than two times the rent.
  • Residential property with furniture – the security deposit can’t be more than three times the rent.
  • Commercial property – there are no restrictions on the security deposit.

Example

  • Sam the tenant’s apartment that he’s renting from Breanna the landlord is unfurnished. She’s only charging a security deposit equal to one month of rent, which is $500. This is well within the two-month limit of $1,000.
  • Instead, let’s the apartment is furnished and Breanna is charging a $2000 security deposit because one of the furnishments is a valuable antique chair. This security deposit is above the three-month or $1,500 limit. And, therefore, Sam the tenant is within his rights to refuse to pay such a high security deposit.

How is a security deposit returned?

A security deposit can be

  • fully returned — if the landlord decides not to withhold any money — or
  • partially returned — if the landlord decides to withhold a sum.

If the landlord decides to withhold an amount, he must deliver to the tenant

  • A written letter explaining why he is keeping part of the deposit,
  • An itemized list of each of the deductions, or problems,
  • The remaining amount of the deposit, and
  • Copies of receipts for the deductions.

For the copies of receipts, these only need to be provided if the repairs cost more than $126. If the repairs will take longer than 21 days, then the landlord must provide an estimate of the costs and then provide the receipts within 14 days of the repairs being done.

A landlord can only withhold amounts that are “necessary and reasonable” and not the result of “ordinary and reasonable wear and tear.” These phrases are terms of art, meaning they have specific definitions within the law. Generally, a landlord can’t charge excessive fees that are not necessary or charge reasonable fees for maintenance in response to regular use of the apartment. More specifically, and landlord can deduct from a security deposit:

  • The cost of fixing any damages to the property that did not result in ordinary wear and tear;
  • The cost of cleaning the rental property to make it as clean as when the tenant moved in;
  • The cost of unpaid rent, including both back-rent (rent unpaid for previous months) and future-rent (rent that still needs to be paid if a tenant bails early on a lease).

Example

  • Not ok – When Sam moves out, Breanna withholds the whole $500, deducting $500 for repairs to a broken outlet. This is arguably unreasonable.
  • Not ok – Breanna deducts $150 for replacing the front door, saying it needed to be done because there was one scuff on it. This is arguably unnecessary.
  • Not ok – Breanna deducts $300 to replace curtains that are slightly worn as the result of ordinary wear and tear. Breanna can’t charge for ordinary wear and tear.
  • Ok – Breanna deducts $500 for replacing a carpet that had been heavily stained from animal urine.
  • Not ok – Breanna withholds $500 for vague damages without providing an itemized list of deductions.
  • Not ok – Breanna deducts $400 for replacing a doorknob, but provides no receipt. This is an unreasonable estimate and it’s likely that she is doing it without good faith.

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