What Can a Landlord Deduct From a Residential Security Deposit in California?

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In California, the amount that a landlord can deduct from a residential security deposit is governed by California Civil Code Section 1950.5(b). A landlord is allowed to deduct money only for unpaid rent, damage beyond normal wear and tear, and reasonable cleaning costs. If she deducts over $125 from the security deposit, then she must provide the tenant with receipts for labor and materials used. A landlord does not have to provide a tenant with a written security deposit receipt. A tenant should request, or at the very least, record, the date and amount of the security deposit.

What Is Normal Wear and Tear?

Damage beyond normal wear and tear includes damage caused by preventable negligence, such as a broken door. Damage due to ordinary wear and tear includes faded paint, carpet that is worn thin due to foot traffic, minor scuffs on paint, scratches on the enamel surface of a sink or bathtub and loose door handles. Damage caused by preventable negligence includes holes and stains on a carpet, large holes in a wall, missing door handles and missing or broken miniblinds.

If damage is caused by a landlord’s failure to repair an issue, the tenant should document the problem from start to finish. The tenant should take photographs and notes as to when and how the problem began. He should also note what he and the landlord did to address it, how he notified the landlord about it and how the problem was resolved. The tenant should save receipts from any expenses related to the problem, such as replacements for ruined furniture. This will help the tenant get compensated for his losses. It will also help him avoid being charged for damage caused by the landlord’s negligence.

What Is the Security Deposit?

A security deposit can include the prior month’s rent, a pet deposit, a key deposit, a cleaning deposit and any deposit for a potential future loss. A landlord can have different security deposits for different tenants, depending on whether they have pets or additional keys. The total amount of the security deposit cannot exceed the legal limits for a deposit. A landlord cannot require an applicant or a resident to pay a pet deposit for a service dog, psychiatric service dog or emotional support animal. This is true even if the landlord requires applicants and residents to pay a pet deposit for a dog that does not fall into one of the above categories.

Amount of a Security Deposit

The maximum amount of a security deposit differs according to whether the unit is furnished or unfurnished. If the unit is rented unfurnished, the landlord can request the amount of two months' rent. If the unit is rented furnished, the landlord can request the amount of three months' rent.

The answer to the question, “May a landlord raise a security deposit?” varies. A landlord may try to increase the amount of a security deposit over time. If a tenant has a fixed-term lease, such as a lease for two years, the landlord may not raise the deposit unless the lease allows it. If the security deposit is already at the maximum amount allowed by law, he may not increase the security deposit even if the lease allows for it. To raise a deposit, a landlord has to serve a tenant with a 30-day written notice of the increase. He can refuse to continue to rent to an existing tenant whose lease is up if the tenant does not accept the increase.

Security Deposits for Armed Services Members

Senate Bill No. 644 amended the law to lower the amount a landlord can charge a service member for a security deposit on residential rental housing. The term service member means an active duty service member. As of January 1, 2020, a landlord cannot request a security deposit of over one month’s rent for an unfurnished unit and over two months' rent for a furnished unit, if the unit is rented to a service member. The landlord also cannot refuse to rent to a service member because the service member’s security deposit would be lower.

The rules of SB 644 do not apply if a unit is rented to a group of people, and at least one of the group is not the service member’s spouse, parent, domestic partner or dependent. The rules also do not apply if the service member tenant has a history of poor credit or of damaging rental property or furnishings.

Tenants Are Entitled to Security Deposits

Evicted tenants and tenants who leave voluntarily are entitled to the refund of an unused portion of the security deposit. A tenant must be on the lease to get the security deposit back. A landlord is not required to return the deposit until all tenants on the lease have left the unit. She must return or account for a security deposit within 21 days of the tenant’s vacancy of the unit. If the landlord does not return or account for the deposit, the tenant is entitled to the amount of the deposit as well as twice the amount of the deposit. To get these damages, the tenant must show that the landlord acted in bad faith. The court is not obligated to award an amount up to twice the deposit.

Addressing an Unrefunded Deposit

A former tenant seeking return of a security deposit should bring the case in small claims court. An individual can sue in small claims court in California for up to $10,000. A former tenant should not bring a case for an unrefunded deposit in an eviction or unlawful detainer case because possession of the property is still at issue.

A tenant can also address an unrefunded deposit by using a mediation or arbitration service, contacting her local district attorney’s consumer fraud unit and consulting an attorney experienced in consumer fraud, particularly with residential rental units.

No Rule on Holding a Deposit

A landlord does not have to hold a security deposit in a certain form, such as a check or money in a bank account. There is no law in California that a landlord must hold the funds for a security deposit separate from her assets. This can present a concern if a landlord declares bankruptcy or the bank forecloses on the property. A tenant may be unable to see a return of the security deposit under such circumstances.

Interest on Security Deposits

In some cities, such as San Francisco, city law requires landlords to pay interest annually on security deposits for rental properties. In San Francisco, a landlord must pay interest on all monies held over one year. Interest payments apply to all residential rental units in the city, except for those where rent is assisted or subsidized by a government agency.

Some cities, such as West Hollywood, require payment of interest on a specific date every year. The amount of interest is determined by the city based on prevailing interest rates. In West Hollywood, a tenant who has not received interest on his security deposit may deduct the amount owed from his rent as of February 1 of each year. This city provides that a tenant may deduct the interest for the last three years when the interest went unpaid.

A tenant interested in her city’s specific rules on interest on security deposits should contact the appropriate city agency. This agency ranges widely, from the rent board in San Francisco to the rent stabilization and housing division in West Hollywood.