Last Month's Rent: How Does It Work in California?

Moving on down the road can be expensive in California, given the different moving-in costs and deposits required by landlords. There's rent to pay, of course, and it is likely to be quite a bit higher than it was a few years back. But rent is just the beginning of what a new renter might owe.

Landlords may legally ask for security deposits, damage deposits, pet deposits, key deposits and last month's rent under California law. But that doesn't mean landlords get to layer on deposits or impose nonrefundable deposits, which are illegal in California. The state's landlord/tenant laws provide caps on the total amount of fees a landlord can require, including last month's rent, as well as spelling out what those fees can be used for.

​Read More:​ Can Unpaid Rent Be Deducted From Security Deposits in California?

Anyone renting a dwelling unit these days is likely to be required to give the landlord more than just the rent money on move-in. Landlords ask for these extra fees to avoid taking a financial hit if the tenant doesn't act responsibly. For example, landlords are concerned that the tenant, his guests or his pets might damage the premises, break furnishings or leave the unit dirty or in bad condition.

To protect themselves financially, landlords ask for extra cash upfront that can be used to repair damages or to make up for any rent the tenant fails to pay. Otherwise, the landlord might have to sue the tenant in court to try to recoup the amount owed, incurring attorney fees and costs. Even if the landlord gets a court judgment, he may not be able to collect it.

All the different types of deposits are used to secure payment for costs that the tenant might not otherwise pay. That's why they are lumped together under the term security deposits.

The deposits landlords require may be called by any number of different names. It's not unusual to see: pet deposits, damage deposits, key deposits, cleaning deposits, last month's deposits and general security deposits. In California, the name is not important. Any and all money that a tenant is required to give the landlord at the commencement of the tenancy — other than rent and background check costs — falls under the security deposit umbrella.

California Civil Code Section 1950.5 provides that the term security includes any payment, fee, deposit or charge, including any fee imposed at the beginning of the tenancy to be used to reimburse the landlord for costs associated with processing a new tenant or imposed as an advance payment of rent. Under the statute, this specifically includes:

• Money to cover rent that the tenant may fail to pay, including last month's rent.
• Money to compensate for damage to the unit.
  
• Money to compensate the landlord for cleaning the premises at the end of the tenancy to bring the rental to the same state it was in at the beginning, minus normal wear and tear.

​Read More:​ What Can a Landlord Deduct From a Residential Security Deposit in California?

The fact that all of these charges are defined as security deposits under California law is important since the law limits the amount of security deposits allowed. The law caps the amount a California landlord can charge as a security deposit at twice the monthly rental amount for unfurnished units and three times the monthly rental amount for furnished units.

That means if a tenant contracts to rent an unfurnished apartment for $1,500 a month, the maximum security deposit that can be charged in California is $3,000. The landlord can simply ask for a security deposit in that amount or break it up into different categories, but the total amount of all moneys a tenant must pay to move in cannot exceed that cap.

In the example above, the landlord may ask for a $1,500 deposit for last month's rent, but that counts toward the $3,000 security deposit cap, so the total of any and all additional security deposits demanded cannot exceed $1,500.

A landlord who charges a security deposit to cover last month's rent is protecting himself against the possibility that the tenant will vacate the property without giving the requisite notice under the law. A tenant can take possession of a rental property under a lease — a contractual agreement to rent the unit for a period of time, usually one year — or as a month-to-month, also called a periodic tenancy.

Most tenancies in California are month-to-month tenancies, where the tenant pays the rental amount at the beginning of a month to have the legal right to stay in the unit for that month. In order to end a month-to-month tenancy, a tenant must give the landlord at least 30 days written notice under California law.

If a tenant leaves without giving the required written notice, he remains liable for the rent for an additional 30-day period. The last month's rent requirement is security for that month's rental payment.

In California, a security deposit that is designated as last month's rent can be used for the tenant's final rental payment. A tenant who is required to give her landlord a last month's rent security deposit need not pay the final month's rent. For example, if the tenant gives the landlord written notice on September 30 that she is leaving on November 30, she need not pay rent for November. Instead, she can rely on the last month's rent deposit.

Note that no other type of security deposit in California can be used by the tenant to pay last month's rent unless the landlord specifically agrees to it. In this example, even if the tenant had given a general security deposit of $3,000 to the landlord at the beginning of the tenancy, she would still have to pay November's rent. In this way, it is more advantageous for a tenant to pay last month's rent than to pay an equal amount as a general security deposit.

In addition, a tenant who gives a last month's rent deposit is certain of getting his last month's rent deposit returned. The deposit must be applied by the landlord to the final rent payment. Other types of security deposits can be applied to damages or cleaning costs and can become the subject of litigation between the two parties. And, even if the landlord does not make any legal claims against the tenant, the tenant is not entitled to get the deposit back until three weeks after he has vacated the rental.

​Read More:​ California Security Deposit Returns: What Tenants Can Expect