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Every landlord should charge a security deposit for their rental. After all, this serves as a financial safety net, ensuring that you don’t incur significant losses in the case of property damage or nonpayment of rent. Security deposits also incentivize responsible tenant behavior. 

Charging a security deposit can help maintain your investment in good condition and profitably. That’s why every landlord should have a clear understanding of their local security deposit laws. 

The experts at Superior West Property Management have written this guide to help you. From return deadlines to acceptable deductions, we’ll go over everything you should know about security deposit laws in California.  

Benefits of Collecting a Security Deposit

Collecting a security deposit offers many benefits, including: 

• Covering Unpaid Utilities – During the lease period, utilities tend to be in the tenant’s name. If your renters fail to pay for utilities before moving or breaking their lease, you can deduct from their security deposit to cover the cost. 
• Covering Cleaning Costs – Tenants should leave your property in the same condition they found it in. If they don’t, you can make up for cleaning and repair costs by making deductions from their deposit. 
• Covering Lost Rent Payments – Nonpayment of rent is considered a breach of the rental agreement, and as such, laws are in place to protect the landlord’s interests. If a tenant fails to pay rent for one or several months, you are entitled to part or all of the tenant’s security deposit.  
• Covering Excessive Property Damage – Sometimes tenants can damage your property excessively. Luckily, you can deduct from their deposit to cover the cost of fixing this damage. You can also file for an eviction if the damage constitutes a lease violation.

A Guide to California’s Security Deposit Law

In California, the collection and return of security deposits are regulated by CA Civ. Code §1950.5. Below, you’ll find the 7 things you should know about security deposit laws in the state of California:

1. Security Deposit Limit

Most places limit how much a landlord can charge a tenant as a security deposit. In the state of California, the limits set for a security deposit will depend on whether or not the rental property is furnished. When furnished, the limit is capped at no more than three month’s rent. While the limit is capped at two months’ rent for unfurnished rentals.  

2. Non-refundable Fees 

Does the state of California allow non-refundable fees? No, in this state, it’s illegal for landlords to charge non-refundable deposits or additional fees. All security deposits must be returned to tenants at the end of their lease, although landlords are legally entitled to make any necessary deductions from them. 

3. Storing a Tenant’s Deposit in California

Many states may have rules regarding how a landlord should store a tenant’s security deposit.  In California, Real Estate Brokers follow CA Business & Professionals Code 10145. That said, it would be a good idea to keep the security funds in a trust account so that you can easily access them whenever needed. 

4. Written Notice After Deposit Receipt

Under California rental laws, landlords are not required to provide tenants with a notice regarding receiving the security deposit. They’re also not required to provide information about where their deposit is stored.

5. Reasons to Withhold a Deposit

California landlords are legally allowed to keep all or a part of a tenant’s security deposit under certain conditions, including: 

• To compensate for unpaid rent
• To make repairs or restorations
• To cover the cost of property damage above normal wear and tear
• To cover cleaning costs needed to return the unit to its condition at the start of the tenancy

The state of California has no limit to how much a landlord can deduct from the deposit for damages and reparations. However, the charges should be reasonable. For instance, a landlord cannot keep or deduct from the deposit to cover issues before the tenant moves in. 

On the other hand, if the cost of damages exceeds the amount charged for the security deposit, California landlords are entitled to seek additional reparation from the tenant. 

6. A Walk-Through Inspection

In the state of California, landlords are required to give tenants the option to perform a walk-through inspection before the end of the lease. This helps landlords check the property’s condition and offers tenants time to make any repairs or deep cleanings before moving out, increasing their chances of getting their full deposit back. 

Landlords must send a written notice to tenants to give them the option to request a walk-through inspection within a reasonable time before the lease expires. If tenants agree to the inspection, it should be conducted within the last 14 days of the lease term. Note that, in California, landlords must give tenants at least 48 hours’ written notice before conducting any property inspections. 

7. Security Deposit Refund in California

Once the tenant moves out, landlords in the state of California have a maximum of 21 days to return all or part of the security deposit. If there are any deductions, the landlord must provide an itemized list of damages alongside the returned deposit. 

Bottom Line

Collecting a security deposit is a simple way to keep yourself and your property protected during a tenancy. However, you must be familiar with your local security deposit laws. This can help you resolve disputes with tenants and avoid misunderstandings. 

Have more specific questions about California security deposit laws? The knowledgeable team at Superior West Property Management can help. We offer full-service property management solutions to property owners in and around Riverside, CA. You can reach out to us at (951) 289-0361 or superiorwestpm@gmail.com for further questions!

Disclaimer: 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 us for any questions regarding this content or any other aspect of your property management needs.