California Security Deposit Laws
Are you a landlord in California, feeling unsure about the security deposit regulations? California security deposit laws are designed to ensure transparency and fairness in the rental process. Understanding security deposit laws and landlord-tenant laws is crucial for protecting your investment and fostering positive tenant relationships.
These laws outline specific procedures landlords must follow when collecting, managing, and returning security deposits. Key provisions include offering tenants an initial inspection before the lease ends and returning deposits within 21 days of move-out with an itemized list of deductions.
Additionally, some cities require landlords to pay interest on security deposits, further protecting tenant rights.
To ensure you’re well-prepared to manage security deposits smoothly and legally, Here’s a comprehensive guide to California’s Security Deposit Laws.
Security Deposit Regulations in California
Under California law, the standard maximum for a security deposit is one month’s rent. However, there are specific circumstances where landlords can charge more:
Two-Month Security Deposit
Landlords can charge up to two months’ rent as a security deposit if:
- They own no more than two residential rental properties, with a max of four rental units.
- They operate as the sole proprietor or through an LLC where all members are natural persons.
- The tenant is not a member of the state or federal military.
Waterbed Exception
Typically, landlords can charge an additional amount on the security deposit for tenants with waterbeds, plus a reasonable administrative fee.
Mobile Homes
The security deposit for a mobile home cannot exceed two months’ rent under any circumstances.
Security Deposit Management in California
California law does not require landlords to keep security deposits in a separate account from other funds. Unlike some states with specific regulations on how and where security deposits must be held, California leaves this decision to the landlord.
Interest on Security Deposits
While California state law does not mandate that landlords pay interest on security deposits, several cities do have such requirements. Cities like Berkeley, Los Angeles, Santa Cruz, and San Francisco require landlords to pay interest on security deposits.
Landlords in these cities can decide how and where to hold the deposits to earn the necessary interest. Always check local regulations to understand the specific requirements in your area.
Accounting for Security Deposits
When landlords in California collect security deposits, these amounts are not treated as taxable income.
Security Deposit Refunds in California
Landlords in California must adhere to specific procedures when returning security deposits. They must offer tenants an initial inspection before the lease ends, allowing them to repair any damages as per the lease agreement. Security deposits, along with an itemized list of any damages, must be returned within 21 days after the tenant moves out.
Landlords are required to notify tenants about the initial inspection option well before the lease expires or upon learning of its termination. If requested, the inspection must occur within the final 14 days of the lease, with a 48-hour written notice given to tenants.
Post-inspection, landlords must provide an itemized statement of repairs or cleaning required to avoid deductions, delivered by hand or left in the rental unit, and must include specific legal language.
Tenants are not required to perform cleaning or repairs, but if they don’t, landlords can deduct related costs from the security deposit. Additional deductions are permissible if damage occurs after the inspection or was concealed by tenant belongings.
Statements must include itemized deductions, descriptions of cleaning/repairs with invoices or receipts, and contact information for service providers unless deductions are under $125 or the tenant waives the right to a statement.
Security Deposit Deductions in California
Landlords in California are permitted to deduct the following from security deposits:
- Unpaid rent.
- Costs of damage beyond normal wear and tear.
- Cleaning expenses to restore the unit to its initial condition.
- Restoration costs that are specified in the lease agreement.
Landlords can charge tenants for carpet replacement if it is damaged beyond normal wear and tear. However, state law requires landlords to prorate charges based on the remaining useful life of the carpet.
For instance, at the end of a ten-year lease, a tenant cannot be charged for the full replacement cost of an eight-year lifespan carpet, regardless of the damage incurred.
Unlike some states, California does not set a legal limit on the amount landlords can charge for damages, but charges must be reasonable. If damages exceed the security deposit, landlords can pursue additional compensation from the former tenant.
Security Deposits During Property Sale in California
When a property changes ownership in California, the landlord has specific obligations regarding the security deposit. The landlord must either transfer the security deposit to the new owner, who then assumes responsibility for it under the same guidelines, or return the deposit to the tenant minus any permissible deductions.
Before the sale, the landlord must provide the new owner with a written statement that includes the remaining amount of the security deposit after any deductions, an itemized list detailing the deductions made, and confirmation of whether the deposit was transferred to the new owner or returned to the tenant.
Regardless of the property’s sale status, landlords must return the security deposit within 21 days after the lease ends. These regulations ensure transparency and compliance when properties are sold in California, safeguarding the rights of both landlords and tenants regarding security deposits.
Bottom Line
California’s security deposit laws ensure transparency and protect the rights of both landlords and tenants, outlining clear procedures for the collection, management, and return of deposits. Rising Tide Property Management can assist landlords in navigating these regulations by providing comprehensive property management services.
Our team ensures compliance with state and local laws, handles initial inspections, manages deposit transfers during property sales, and provides accurate itemized statements. This expertise helps landlords avoid security deposit disputes or evictions with tenants.
Contact Rising Tide Property Management to simplify your responsibilities and ensure full compliance with California security deposit laws.
Disclaimer: Please note that the information provided in this blog is intended for general guidance and should not be considered as a replacement for professional legal advice. It is important to be aware that laws pertaining to property management may change, rendering this information outdated by the time you read it.