Security deposits are one of the most common methods of collecting money to protect a landlord or property owner from damage made by the tenant. However, landlords cannot simply demand money from a tenant then refuse to refund the deposit unless the tenant commits one or more breaches of the lease agreement according to law.
In California, there are specific rules governing the collection of security deposits. Other states may have other laws or rules about security deposits, so it is important to understand your own states’ laws. California rules are as follows:
- You must not charge more than the maximum amount allowed for a security deposit. California’s Code §§ 1950.5 and 1940.5g limits security deposits to two months’ rent for unfurnished or three months’ rent for furnished dwellings.
- In some areas, the landlord must pay interest on the security deposit. Los Angeles currently requires landlords to pay .3 percent interest on security deposits. About 14 other cities also have interest requirements. While the amount of interest paid is usually not much, landlords can incur substantial fines if they fail to follow the law.
- Landlords cannot charge pet deposits if they are non-refundable. According to Code §§ 1950.5m, non-refundable deposits are not allowed, including pet deposits.
- All security deposits must be returned within 21 days. California Code §§ 1950.5g requires the prompt return of all security deposits. Landlords have three weeks to return the unused portion of the deposit to the tenant.
California law, as well as that of other states, also specifies the terms under which the landlord can withhold part or all of the security deposit. Those circumstances in California include the following:
- The landlord may withhold the security deposit to pay the balance of unpaid rent.
- The landlord may withhold the money if the rental property requires cleaning to make it as clean as it was when the tenant first took occupancy.
- The landlord may charge against the security deposit for repair of damages that are not normal wear and tear and were caused by the tenant.
- The landlord may charge the tenant’s security deposit for the cost of restoration or replacement of furnishings or personal property such as keys.
If the repairs and cleaning come to more than $125, according to Civ. Code §§ 1950.5g 4A, the landlord is required to give the tenant a written accounting of the costs.
If a landlord keeps the security deposit in bad faith, the tenant may claim up to twice the amount of the security deposit in damages in addition to any actual damages, according to Civ. Code §§ 1950.5(l).
If you are concerned about handling your security deposits legally and safely, contact CheckPoint for help!