It's become quite hard to find an apartment to rent in California that doesn't require a security deposit. These deposits are sums of money a landlord requires at the beginning of a rental that will be used in case the tenant fails to pay rent or leaves the unit dirty or damaged. Security deposits are regulated both by California landlord-tenant laws and also by local rent control laws in some cities. Both landlords and tenants are bound by those laws.
California Security Deposit Laws
Many aspects of security deposits in California are regulated by California landlord-tenant law, found in Civil Code Section 1950.5 and following statutes. These laws set out landlord and tenant rights and responsibilities regarding deposits, including how much of a deposit the landlord can require, what the deposit can be used for, and the timing and procedure for return of the deposit when the tenancy is over.
But the California statutes are not the only security deposit laws that can impact the rights of the parties to a rental agreement. Many cities in California, including some of the state's largest, like San Francisco, Los Angeles and Sacramento, have enacted rent control laws that provide additional tenant protections regarding security deposits.
Maximum Amount of Security Deposits
It used to be that the standard amount for security deposits in many areas was one month's rent. This is no longer the case. As the urban rental market tightens in popular California cities, landlords are able to ask for increasingly higher rents and also higher deposit amounts. The deposits may be called last month's rent, pet deposits, key deposits or cleaning deposits, but all are security deposits under California law.
The California legislature has stepped in to regulate this practice. The law today imposes a cap on the amount of security deposits a landlord can demand of a tenant. There are different caps for furnished rentals and unfurnished rentals. Each is based on a multiple of one month's rent:
- Furnished rentals: three times one month's rent.
- Unfurnished rentals: two times one month's rent.
What about the security deposits called by different names, like cleaning deposits or last month's rent? All of the different types of deposits, when added together, cannot exceed the caps set by the legislature. If you rent an unfurnished apartment for $2,000 a month, your deposit cap is $4,000. That means that when you total the cleaning deposit, the last month's rent, the pet deposit and any other deposits, the sum cannot exceed $4,000.
Are Nonrefundable Security Deposits Allowed?
All security deposits in California are refundable regardless of whether the landlord classifies them as refundable or nonrefundable. If tenants follow the rental agreement terms, pay their rent on time, and return the unit undamaged, other than normal wear and tear, they are entitled to the return of every deposit they gave the landlord. This is the case even though they signed a rental agreement with a nonrefundable deposit provision in it.
If a landlord refuses to return a rental deposit because it was labeled nonrefundable, the tenants will be able to recoup the amount by going to small claims court. They may be entitled to additional amounts, like twice the amount of the deposit, if the landlord is found to have acted in bad faith.
Deductions From a Security Deposit
The landlord is entitled to retain part or all of the security deposit in certain circumstances. First, if a tenant fails to pay the last month's rent amount or, at the time of departure, owes any amount of back rent, the landlord can keep part of the security deposit to cover this.
The landlord can also retain funds from the security deposit if the tenants, their guests or their pets have caused damage to the unit. Broken windows, scratched floors or holes in walls are all examples of damage that a landlord can have repaired and pay for with funds from the security deposit.
A landlord can also keep security deposit money when the tenants leave the apartment dirty. The rule generally is that the tenants must return the unit in as clean a condition as it was when they moved in, minus normal wear and tear. For example, if the tenants have stayed in the unit for five years, it is perfectly normal that the carpets are somewhat worn and the paint yellowed. A landlord in this circumstance cannot replace the carpets or repaint the place and make the tenants pay for it by keeping the security deposit.
Verifying Problems with Unit Condition
Both landlords and tenants are well served to take steps at the beginning of the tenancy to help establish the condition of the property when the rental ends. Some landlords provide an inventory or a checklist to entering tenants that specifies the different areas of the apartment and their level of cleanliness. The tenants can inspect the property themselves, inventory in hand, and let the landlord know if they agree with it or not. The parties can return to this inventory at the end of the tenancy and compare the condition.
It's also a great idea for both landlords and tenants to take photos of the premises as the tenancy begins, then similar photos at move-out. This will help the parties – and, if necessary, the court – determine whether there are issues about damage and cleanliness or just normal wear and tear.
Tenants also have the right to demand a pre-move-out inspection. Under California law, the inspection must occur no more than two weeks before the tenancy ends. After the inspection, the landlord provides an itemized list of damage issues he expects to deduct from the deposit. The tenants can try to fix these problems before the tenancy ends. The landlord can make deductions only for items that did not originally appear on the list if they were not visible during the inspection.
California Law on Return of Security Deposits
A California landlord has 21 days from the day tenants vacate to return the security deposit. If the landlord has deducted amounts from the deposit, she must provide written documentation of unpaid rent, damage to the unit or necessary cleaning, plus the costs of these repairs and cleaning. She also has to return any remaining amount of the security deposit along with this information.
If the amount of money the landlord deducted from the deposit is more than $125, the landlord also must provide invoices and receipts that document the costs. If he has not yet had time to get the repairs done, he can deduct an estimate of the expenses. After that, he is obligated to provide copies of the receipts within two weeks of the time he gets them.
If the landlord doesn't return the deposit or if the tenant and landlord cannot reach an agreement on the amount of security deposit that should be returned, the tenant can sue the landlord for return of the security deposit. The tenant can ask for return of the amount of the security deposit, plus twice the amount of the deposit for bad-faith damages. The court will determine if the landlord acted in bad faith and, if so, it will award the tenant the extra damages.
Security Deposit Interest
There is no general law in California requiring landlords to pay interest on security deposits. However some rent control jurisdictions, like Berkeley and Los Angeles, require that interest be paid and set that interest rate.