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Everything You Need to Know About Security Deposits in CA

What is a Security Deposit?

When you lease or rent property in Los Angeles, landlords collect a security deposit along with the first month of rent. The security deposit is like an insurance policy for landlords. If the tenant damages the property or breaks the lease- the landlord can retain some, or all, of the security deposit to cover their losses.

For tenants, you may not like having the additional upfront expense, especially when you are already paying for a move, and you may need to buy furniture for the new place, but you are just going to have to get use to it, because landlords need some of your hard-earned cash to hold onto to feel safe.

Everything in real estate is negotiable, and so is the security deposit. California State Law addresses the handling of Security Deposits in CA Civil Code 1950.5.

Security Deposit Legal Maximums 

The Legal Maximum Security Deposit in California for an Unfurnished Lease is (2) Month’s Rent. For Furnished leases, the legal maximum is (3) Month’s Rent. However, there is no legal maximum on prepaid rent. Commercial Properties have no limit on security deposits.

For example, let’s suppose that you rent an unfurnished apartment for $2,000/mo. The legal maximum a landlord can collect as a security deposit is $4,000. The landlord will also want first month’s rent, so the total move-in cost would be $6,000.

There is no such thing as Non-Refundable Security Deposit in California. Some Landlords will try to charge a “reservation fee” or “holding fee” on a unit or say that a portion of the security deposit is non refundable, while they wait for the new tenant to move in. This is illegal (**cough cough** Barrington Plaza’s $500 holding fee). Unlike rent, which belongs to the landlord, security deposits belong to the tenants. Landlords “hold” the security deposit for the tenant and may only deduct from it for specific reasons, and non-refundable holding fee is not one of them.

Move-In Inspection

It is incredibly easy nowadays to take pictures because everyone carries a cell phone, and all the new smart phones have cameras. I recommend that BOTH landlord and tenant take pictures of the condition of the property during move in. Keep the pictures somewhere you can find them later. You may need to refer to them when moving out. The condition of the property when you received it sets the precedent for how the property should be returned. In the event of a disagreement, pictures are worth 1,000 words.

Usually during move in, the tenant requests fixes or ask for permission to make changes. In my experience, I find that New tenants expect everything in their new place to be working and are pickier than long term tenants, especially if they are paying higher rents.

For Move in fixes, try to set a realistic time line for repairs with the tenant, and prioritize the most important things first. The little stuff sometimes just goes away. As a landlord, once a tenant has moved in and is settled, I do not replace consumables like light bulbs, smoke detector batteries, garage remote batteries, or HVAC vent screens but I will make sure the tenant has a fresh set when they move in.

Tenants will often ask for permission to paint the rental the color of their choosing. If you give the tenant permission to paint the unit a new color that is not a neutral such as off white- it may make the unit more difficult to re-rent when the tenant moves out.  Be sure to clarify with the tenant, if you give them permission to paint the unit, who is responsible for painting the unit back to a neutral color at move out.

Another point with move in is changing the locks. Most landlords I know don’t change the locks between tenants. It is not required. I personally have no problem if the tenants want to change the locks- all that I ask is that they notify me and provide me with a copy of the new key.

Moving-Out Inspection

The move out process begins with the appropriate notice. Some properties in Los Angeles have rent control. Rent control properties have their own move out rules. Evictions too.

*Helpful Post from DCA on Moving out http://www.dca.ca.gov/publications/landlordbook/moving-out.shtml#notices

For regular situations of serving notice to end a month to month tenancy, or moving out at the end of the lease- the landlord must give the tenant a 30 day notice if the tenant has lived in the property less than 1 year, or a 60 day notice if the tenant has been living in the property more than a year. Tenants on the other hand, are only required to give landlords a 30 day notice. Ca Civil Code 1946.1

I recommend for both Landlords and tenants to do a move out inspection 3-14 days prior to the move out date. The Landlord will be able to assess the condition of the unit, and if there are anything they plan to deduct- it gives the tenant the opportunity to remedy the situation themselves first.  Once again, take pictures to document the condition of the way the property was left. If you leave the property in the same condition as you got it, you should expect your entire security deposit back. Lock the property up and return the keys and provide the landlord with your new mailing address, so they can mail you your security deposit check.

*Helpful Post from DCA on Security Deposit Refunds http://www.dca.ca.gov/publications/landlordbook/sec-deposit.shtml

Tenants have been waiting a long time and been looking forward to get their security deposit back- in my experience they expect the entire security deposit returned, so if you know you will be deducting something be very clear. By law, landlords have 21 days to return the security deposit after move out. There is nothing that says the landlord can’t return it sooner.  If the landlord deducts any expenses from the security deposit they must give an accounting of those expenses. A landlord may only deduct from a security deposit for the following reasons:

Legal Reasons For Security Deposit Deduction:

  1. Unpaid Rent
  2. Repairs beyond normal wear and tear
  3. Cleaning (includes disposal of trash)
  4. Cost to replace lost keys and/or Remotes

What is Normal Wear and Tear?

There is no set definition for normal wear and tear since it can be interpreted so broadly. This can be frustrating. The main idea is that- as things age and are used, they wear out. Even with the most careful use, wear is inevitable. Therefore, normal wear and tear is the reasonable amount of wear to be expected for the time of use. Keep in mind, that if something was already quite old before you moved in, that should be factored in. For understanding wear and tear- I like to think about tires on a car. If you obey all the rules of the road, new tires should last 50,000 miles or 3-4 years. However, if you are racing and squealing out your tires all the time, those tires may only last one year.

Let consider some real estate examples. First Paint: Let’s suppose you lived in an apartment for two years and at the end of the lease when you moved out, there were some scuffs and scratches on the walls from foot traffic and bumping furniture. If all that is required is a little touch-up painting, this would be ordinary wear and tear. Let’s suppose instead, that this apartment was a no smoking rental, and you smoked inside your apartment anyways for two years straight. When you move out, that apartment has a strong cigarette odor, and the walls have yellowish smoke stains. This is beyond normal wear and tear. Or, let’s suppose that you have kids, and the kids were allowed to draw all over the walls. Painting is going to be deducted from your security deposit.

Let’s consider a different example: Carpet. Let’s suppose you moved into your apartment and the carpets were already five years old. They had a few discolored areas and had some excess wear in high traffic areas around the hallways and doors. Three years later you move out, but before you move you have the carpets professionally cleaned. The landlord may not charge you for brand new carpets. It may be true that the carpets do need to be replaced (carpet lasts 8-10 years on average) but that is because of their age, and not because of misuse. No matter how many times a carpet cleaner goes over a patch of old carpet, it is still going to be an old carpet. Carpet cleaning isn’t magical and makes carpet new again. When it is time to replace the carpet, it is time.

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