California landlords have a right to require tenants to pay a security deposit as part of the move-in costs under state law (CA Civil Code 1940-1954.05).
However, you also have certain responsibilities you must abide by. Including how much you can collect, how you must store it, and when you must return it after a tenant moves out.
The following is a guide to security deposit laws in California.
California Security Deposit Limit
Unfortunately for landlords, there is a limit to how much security deposit you can charge tenants in California. The amount to charge depends on whether you’re renting out a furnished or an unfurnished property.
If you have provided the tenant with a furnished unit, then you must not charge a deposit exceeding 3 months’ rent. If the monthly rent is, say, $1,000 a month, then you must not charge them a deposit exceeding $3,000.
If you haven’t furnished your property, then the most you can ask from a tenant must be 2X the monthly rent. Using the same example, this means you must not charge an amount exceeding $2,000.
However, there are two exceptions to these two rules. If renting to a tenant who is an active service member, then you must subtract an amount equivalent to one month’s rent. This applies regardless of whether you’re renting out a furnished or an unfurnished rental property.
The other exception is if the tenant you rent to owns a waterbed. In such a case, you can charge an extra 1.5 times more as a deposit.
In California, a security deposit cannot be “non-refundable.” The only exception here is an application screening fee. And even so, the fee must be reasonable.
Additional Pet Deposits
If you allow pets in your rental property, then you may be able to charge an additional pet deposit. Generally speaking, landlords charge roughly $500 in pet fees and deposits. The exact amount may be dependent on things like the number, breed, and size of a pet.
As a landlord, you can only charge a pet deposit once, and may or may not be refundable, depending on the terms of the lease agreement.
Please note, however, that it’s illegal to charge additional pet fees for tenants with service or support animals. This is according to the state’s fair housing laws that prohibit discrimination based on disability, among other classes.
Storing a Tenant’s Deposit
Certain states require landlords to store their tenants’ deposits in a particular way. The state of California, however, doesn’t require landlords to store their tenants’ deposits in any particular way.
Some states also require landlords to provide their tenants with a notice of receipt for their security deposit. This isn’t the case in California. No law obligates you to do so.
That said, it’s still a good idea to do so nonetheless. In the notice, you may want to let the tenant know of important things such as:
- How much security deposit you have collected.
- The date you received it.
- How you’re storing it.
- What the tenant needs to do to get it back after they move out.
While there may be no statute at the state level, make sure to do due diligence at the local level. Some cities like Santa Cruz, Los Angeles, Berkeley, and San Francisco, for instance, require landlords to pay interest on the security deposit.
Reasons to Withhold a Tenant’s Deposit
Tenants, too, have a number of obligations to honor under the statewide landlord-tenant laws. For instance, paying rent on time, caring for their rented premises, and reporting issues on time.
If the tenant fails to do these things and they result in financial damage, you can make appropriate deductions to their deposit.
The state of California authorizes landlords to make appropriate deductions in the following scenarios.
- If the tenant fails to clear their rent payments at the time they are moving out.
- If the tenant leaves their rented premises in a dire state of uncleanliness.
- Cost of fixing damage exceeds normal wear and tear.
- Any restoration costs that may be mentioned in the lease agreement.
There is no legal limit on how many deductions you can make. The only requirement is that the damages be above normal wear and tear.
If the tenant’s deposit doesn’t cover all the costs, you may seek additional damages from the tenant.
Normal Wear and Tear vs. Damage
California defines normal wear and tear as the damage that occurs to a unit after standard, everyday use. The following are examples of this kind of damage.
- Lightly dirtied grout
- Faded paint
- Faded flooring
- Loose door handles
- Worn carpets
- Stained bath fixtures
- Lightly scratched glass
Damage, on the other hand, occurs as a result of carelessness, negligence, abuse, or misuse by a tenant. The following are examples.
- Holes in the wall
- Broken tiles
- Broken windows
- Heavily stained carpets
- Holes or missing carpet
- A smashed bathroom mirror
Security Deposit Refund in California
You have 21 days to return your tenant’s deposit after they have moved out of their rented premises. If there are deductions to make, then you must provide the tenant with an itemized list.
Change in Property Ownership
You have two options to consider. One option is to transfer the deposit to the incoming landlord, minus any appropriate deductions. The other option is to return the deposit back to the tenant, less allowable deductions.
Disclaimer: This blog isn’t intended to be a substitute for professional legal advice. Laws change and this information may become obsolete at the time you read it. For further help, please get in touch with a qualified attorney or an experienced property management company.
Now, you are familiar with what the California security deposit law says when it comes to handling a tenant’s security deposit. If you need help managing your rental property, Graf Property Management can help. Get in touch to learn more about our unique suite of property management services.