Security deposit laws are essential information to understand as a rental property owner. It helps prevent cases of forfeiture if you follow the correct number of days to refund the security deposit to the tenant. On the tenant’s side, it will also prevent cases of forfeiture when he or she knows the governing conditions when a landlord can keep the security deposit.
There are many benefits when a landlord collects a security deposit from the tenant in Antelope Valley, California. The following are some of them:
- Unpaid utilities by the previous tenants can be covered. When a tenant moves out, the security deposit can be deducted to pay for the utility bill left behind. This is one of the great advantages of having a security deposit to fall back on.
- Cleaning fees can be covered. Some tenants are messy and can leave your property in less than pristine condition. Since you need to open the property for showings to prospective renters, it’s only proper that cleaning costs will be deducted from the security deposit.
- If a rental loss occurs, it can act as protection. It happens fairly often that tenants are not able to meet their monthly obligations to pay the rent. When this happens, the tenant’s security deposit can protect the landlord from incurring a rental loss.
- If rental income stops, it can act as a buffer. There are some fortuitous circumstances that cannot be controlled. A tenant might decide to move to a new unit and break the lease. You might also find yourself in a situation when a tenant just disappears and abandons your rental unit. When this happens, the security deposit can be used as payment for the rental income loss.
- Repair costs for property damage can be covered. When a tenant commits property damage whether intentional or not, it is their duty to pay for the repair. Security deposits can be used to cover repair costs in these cases.
Here’s a Guide to California’s Security Deposit Laws
1. Security Deposit Limit
Most states limit the amount a landlord can charge a tenant for a security deposit. In the state of California, the security deposit amount depends on if the rental property is furnished or not.
If a property owner’s unit is furnished, a landlord can collect as much as 3 months of rent as a security deposit. However, if it’s unfurnished, only a maximum of 2 months’ rent deposit is allowed.
Recently, as of January 1, 2020, a tenant who’s an active duty service member is permitted to deposit only 2 months of rent for a furnished rental. If the rental is unfurnished, then only an equivalent of 1 month is needed.
2. Nonrefundable Fees
Does the state of California allow non-refundable fees?
No, it doesn’t. Once tenancy ends, all the deposits made by the tenant to the landlord are considered refundable.
3. Storing a Tenants Deposit in California
Every state differs when it comes to storing a tenant’s deposit. Some states require the security deposit to be placed in either an interest-bearing or non-interest bearing account. Some may even require a surety bond to be posted.
In the case of California, there are no hard and fast rules when it comes to where the security deposit must be stored. However, there are 15 rent-controlled cities that require landlords to pay interest on the security deposit. In fact, the interest rate is even mandated and must be paid yearly. This includes the city of California and San Francisco.
4. Written Notice after Security Deposit Receipt
In California, there’s no requirement for landlords to furnish a written notice to their tenants when receiving a deposit. It’s good practice nevertheless because it can act as a written proof where key details like amount, date received, and where it’s stored can be found.
5. Reasons to Withhold a Tenant’s Security Deposit in California
There are several conditions that permit landlords to keep the entire or part of a renter’s security deposit. In California, common reasons are:
- A landlord has to find a replacement of damages on personal items or lost furniture;
- A landlord has to conduct repairs or find licensed contractors to perform the task;
- A landlord has to arrange for the cleaning of the rental unit;
- And a landlord has to recoup unpaid rent.
A landlord in California cannot keep the deposit to pay for damages that resulted from normal wear and tear in the rental property. This also includes pre-existing conditions found in the rental unit.
6. A Walk-Through Inspection
Under the California landlord-tenant laws, a walk-through inspection is needed. This is performed to assess the condition of the rental unit.
A 48-hours’ advance written notice must be given by the landlord to the tenant prior to the inspection.
7. Security Deposit Return California
When a tenant moves out from the rental property, a period of 21 days is given to the landlord to refund the tenant’s security deposit. Otherwise, landlords will be liable to pay double the amount including damages if a tenant files a lawsuit. If only a portion of the security deposit is returned, a written list of the costs must be presented to the tenant.
8. Change in Property Ownership
The previous landlord has two choices in this situation:
The first option is to refund the tenant the security deposit and make fewer deductions. The new landlord must be informed of this proceeding.
The second option is for the security deposit to be transferred and handled by the new landlord. A written notice must be provided to the tenant. Further, the notice must contain additional details such as the name and contact address of the new landlord.
Disclaimer: Please note that this blog should not be used as a substitute for legal advice from a licensed attorney in your state. Laws frequently change, and this post might not be updated at the time of your reading. Please contact Century 21 Doug Anderson for any questions you have in regard to this content or any other aspect of your property management needs.