How To Protect Your Security Deposit In California

Disputes over the return of the security deposit are one of the most common disputes that arise between landlords and tenants. As a result, the California legislature created California Civil Code Section 1950.5, which clearly sets forth both the tenant’s and landlord’s obligations with regards to the security deposit. Below you will find a summary of the most pertinent provisions of Section 1950.5, as well as tips and advice on how to protect yourself both as a landlord and a tenant.

Security Deposits Generally

California law permits landlords to require tenants to furnish a security deposit at the beginning of a tenancy. The amount of the security deposit may not exceed an amount equal to two months’ rent in the case of unfurnished residential property, or three months rent for furnished residential property. Some landlords will assign a different name to a deposit or fee, such as a pet deposit, key fee, cleaning fee, etc. Regardless of the title assigned by the landlord, the law considers all the fees and deposits charged at the beginning of a tenancy to be a part of the security deposit.

The security deposit must be returned at the end of the tenancy, but the landlord is entitled to take deductions against the security deposit for a variety of expenses, including defaults in rent, repair of damage to the premises, and cleaning of the premises at the end of a tenancy to return the property to the same level of cleanliness as the beginning of the tenancy. Note that the landlord is not permitted to take deductions against the security deposit for “ordinary wear and tear”.

Beginning The Lease And Protecting The Security Deposit

Documenting the condition of the property at the beginning of the lease term is crucial to both the landlord’s right to take deductions as well as the tenant’s right to demand a return of the security deposit. As discussed above and further explained below, the landlord is entitled to take deductions against the security deposit for damage caused by the tenant to the property. Conducting a walk-through of the property, documenting any damage to the property, and taking photographs of damage at the beginning of a tenancy is a crucial step for both the landlord and the tenant. Creating this documentation ensures that when deductions are later taken for damage to the property, neither party can falsely claim that the damage did / did not exist at the time the tenant took possession of the property.

Terminating The Lease And Return Of The Security Deposit

Before the end of the lease, Section 1950.5 requires that the landlord provide the tenant with his or her option to request an “initial inspection” of the premises before the tenant vacates. Upon the tenant’s request, no earlier than two weeks before the end of the lease the landlord must inspect the premises and provide the tenant with an itemized statement specifying repairs or cleanings that are proposed to be the basis for any deductions against the security deposit. The purpose of the “initial inspection” is “to allow the tenant an opportunity to remedy identified deficiencies, in a manner consistent with the rights and obligations of the parties under the rental agreement, in order to avoid deductions from the security.” In other words, the landlord must inspect the premises, provide the tenant with a list of proposed deductions from the security deposit, and the tenant then has the opportunity to remedy the identified damage in order to avoid deductions against the security deposit.

After the tenant vacates the premises, within 21 days the landlord must provide the tenant with an itemized statement indicating the basis for and amount of deductions against the security deposit, as well as a check for any remaining portion of the security deposit. The itemized statement must be accompanied by copies of documents showing the charges, e.g. receipts or descriptions of the work, and estimates for work that has not yet been completed.

Penalties For Failure To Return The Security Deposit

The bad faith claim or retention by a landlord of the security deposit in violation of Section 1950.5 may subject the landlord to “treble damages”, i.e. damages of up to twice the amount of the security deposit in addition to actual damages. This provision, as well as the provision requiring the “initial inspection”, was recently added by the California legislature to address the ongoing problem of landlords abusing the security deposit laws by wrongfully retaining security deposits. However, California law also provides that if a landlord’s failure to comply with Section 1950.5 is not in “bad faith”, then the treble damages provision may not apply, and the landlord may still be entitled to take deductions against the security deposit despite the breach of Section 1950.5.

In sum, it is extremely important for both the landlord and tenant to document the condition of a leased property both at the beginning and at the end of a tenancy. Landlords should be cognizant of the deadlines imposed by Section 1950.5, specifically the deadlines for the initial inspection and return of the security deposit. Failure to follow these rules can result in forfeiture of the security deposit or even a lawsuit.

For more information on how Esquire Real Estate Brokerage, Inc. can help you in the Los Angeles real estate market, feel free to give us a call at 213-973-9439 or send us an email at info@esquirereb.com.