Property Manager – Tarzana – Residential and Commercial Property Management

Basics of California’s Security Deposit Law

Limits and Regulations California Landlords and Tenants Must Know

By Erin Eberlin

As a California landlord, it is your responsibility to understand the security deposit laws in the state. The rules include a limit on how much you can collect as a deposit, a required walk-through inspection and what you must do with the tenants’ deposits if you sell your property. Here are eight security deposit basics California landlords must follow.

Basics of California’s Security Deposit Law:
Security Deposit Limit: Two Months’ Rent Unfurnished. Three Months’ Rent Furnished.

Nonrefundable Deposit: Not Allowed.
Storing Deposit: No Specific Rules
Written Notice After Receipt: Not Required
Keeping Deposit: Unpaid Rent, Damages, Cleaning Costs, Future Debt
Walk-Through Inspection: Yes, if tenant allows it
Returning Deposit: 21 Days’ of Tenant Move-Out
Selling Property: Transfer Deposits to New Owner or Return Deposits to Tenants
1. Is There a Security Deposit Limit in California?
In California, you can ask for a maximum of two months’ rent if the apartment is unfurnished. If the apartment is furnished, you can ask the tenant for a maximum of three months’ rent as a security deposit.

2. Can You Charge a Nonrefundable Deposit?
No, in California, you cannot make a security deposit as nonrefundable.

3. How Must You Store The Security Deposit in California?
In California, the landlord is responsible for storing the tenant’s security deposit, but there are no specific rules for doing so.

The landlord does not have to hold the security deposit in a separate bank account and is not required to pay the tenant interest on the security deposit.

4. Is Written Notice Required After Receipt of the Security Deposit in California?
In California, the landlord is not required to provide the tenant written notice after receipt of the security deposit.
5. What Are Some Reasons You Can Keep a Tenant’s Security Deposit in California?
In California, you may be able to keep all or a portion of a tenant’s security deposit for the following reasons:

Tenant defaults on rent payment.
Damage to the apartment in excess of normal wear and tear.
Cleaning costs to restore the unit to the condition it was in at the beginning of tenancy.
To pay any future debts that may be incurred due to tenant’s violation of lease.
The landlord cannot keep the deposit to cover ordinary wear and tear or to pay for conditions that existed before the tenant moved into the unit.

6. Is a Walk-Through Inspection Required in California?
Yes. The landlord must notify the tenant in writing within a reasonable time before the end of tenancy of the landlord’s intention to inspect the property prior to the tenant’s move-out. The tenant does not have to agree to a walk-through inspection.

If a tenant agrees to a walk-through inspection, the inspection should take place no sooner than two weeks before the end of tenancy.
The landlord is required to give the tenant 48 hours written notice prior to the inspection, of the date and time of inspection, unless both parties agree, in writing, that written notice is not necessary.

The purpose of this inspection is to allow the landlord to point out any potential reasons he or she may withhold a portion of the security deposit and to allow the tenant to fix the problems before the final inspection. The landlord must present the tenant with a list of any and all repairs that need to be made before the final inspection.

7. When Must You Return a Tenant’s Security Deposit in California?
A California landlord must return the tenant’s security deposit within 21 days of tenant move-out. This notice must include an itemized statement indicating:

a. The amount of security deposit received.

b. Any itemized deductions- If deductions have been taken from the security deposit, the landlord is required to provide documents and receipts showing the actual charges that were incurred- materials, labors, cost of hiring someone to do the work, etc. If the work has not yet been completed, the landlord is required to deduct a good faith estimate as to the cost of the work.

c. The amount of security deposit that is being returned to the tenant.

8. What Happens to the Security Deposit If You Sell Your Property?
In the event that you sell your investment property, the landlord has two options:

Transfer the security deposit, minus any deductions, to the new owner. The landlord is then responsible for notifying the tenant in writing of the name, address and phone number of the new owner and is responsible for providing written notice to both the new owner and to the tenant of the amount of security deposit and any deductions that have taken from the security deposit.

Return the security deposit, minus any deductions, to the tenant. The landlord must still notify the new owner in writing of the amount of the security deposit, any deductions that have been taken and the landlord’s decision to return the deposit to the tenant.

FROM: https://www.thebalance.com

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