The state of California has rules about security deposits that are meant to protect both landlords and tenants. The law includes limits on the amount a landlord can charge, the legal reasons a landlord can take deductions, and a tenant’s right to a walk through inspection. Here are the basics of the law every landlord and tenant should understand.
Furnished Units Can Charge More
California state law does limit the amount a landlord can collect as a security deposit. The maximum amount differs depending on whether the unit is empty or furnished.
- Unfurnished Units- For units where the tenant must provide their own furniture, the most a landlord can ask as a security deposit is the equivalent of two months' rent.
- Furnished Units- If the apartment is being rented furnished, a landlord can ask the tenant for a maximum of three months’ rent as a security deposit.
Can California Security Deposits Be Nonrefundable?
No. In California, a landlord cannot make a security deposit nonrefundable. The security deposit is the property of the tenant, less allowable deductions.
Are There Rules for Storing the Deposit During Tenancy?
It is a landlord's responsibility to store tenants' security deposits during tenancy, but California law does not include any specific requirements for doing so. Unlike states such as Iowa, the deposit does not have to be placed in a separate bank account and, unlike New Hampshire, it is not required to earn interest.
Is a Security Deposit Receipt Required in California?
California landlords do not have to provide tenants with a written security deposit receipt after collecting the tenant's security deposit. Even though it is not required by law, having written proof of the amount of deposit received, date received and where the deposit is being stored is always a good idea.
5 Reasons California Landlords Can Keep a Tenant's Security
In California, a landlord 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 the tenancy.
- To pay any future debts that may be incurred due to tenant's violation of the lease.
- Other breaches to the lease.
2 Reasons Landlords Cannot Keep a Tenant's Security
California landlords cannot make deductions from the deposit for the following reasons:
- To cover ordinary wear and tear.
- To pay for conditions that existed before the tenant moved into the unit.
Do California Tenants Have a Right to a Walk-Through Inspection?
California landlords can perform walk-through inspections. The purpose of this inspection is to let the landlord point out any potential issues and give the tenant time to fix them before having money taken from the security deposit. A landlord and tenant must follow these steps:
- 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 before 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 the 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 landlord must present the tenant with a list of any and all repairs that need to be made before the final inspection.
21 Days to Return Security Deposit
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:
- The amount of security deposit received.
- 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.
- The amount of security deposit that is being returned to the tenant.
What Happens to Deposit When Rental Property Is Sold?
If a landlord sells the investment property, the landlord has two options for the tenants' security deposits:
- Transfer the security deposit, minus 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.
- Providing written notice to both the new owner and to the tenant of:
The amount of security deposit.
- Any deductions that have taken from the security deposit.
- Return the security deposit, minus 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.
What Is California’s Security Deposit Law?
California Security Deposit Law can be found in California Civic Code 1950.5.