California Security Deposit Law for Rental Properties

California Security Deposit Law for Rental Properties

Author: Kasee Godwin
Date: 10.18.2023

Is there a limit on how much the property manager/owner can charge for an application fee? If so, what is that amount?

California civil code states that property owners in the state cannot charge an application fee of more than $49.50, and the amount should not exceed the landlord’s actual out-of-pocket costs.

What is the security deposit amount the landlord can collect?

As a California landlord, you can request a security deposit of up to two month’s rent for an unfurnished apartment and three months’ rent for a furnished apartment to protect your property in the event of damages. An additional one-half month’s rent may be added if a waterbed is part of the furniture. If the tenant is an active service member, the maximum-security deposit is one month lower than the security deposit limit.

The lower maximum-security deposit will not apply if the tenant has a poor credit history, a history of causing damage to rental property, or is sharing the unit with a group of people that are not considered a direct spouse, partner, parent or dependent of the service member.

Is a California security deposit non-refundable?

The instances when a landlord can keep a tenant’s security deposit include when a tenant is terminating a month-to-month rental, or the rental has no fixed term, or when the landlord is terminating a lease with no fixed term.

Can the property manager/owner collect a fee for pets?

A pet deposit separate from the apartment security deposit is allowed in the state of California. Service pets are an exemption, and disabled persons with service pets do not have to pay an additional security deposit. However, if a service dog causes damages, the renter is still liable for covering the costs.

How does the security deposit need to be held?

There is no California law that regulates how a security deposit needs to be held by the landlord or property manager.

Is the property manager/owner required to tell the tenant where the deposit is held?

Property managers in California do not have to tell tenants where the security deposit is held.

Is the property manager/owner required to tell the tenant what the interest rate on the account is (if applicable)?

Property owners in California are not required to tell tenants what the interest on their security deposit is (if applicable).

What can the property manager/owner deduct from the security deposit?

Property owners in California may deduct unpaid monthly rent, cost of repairs and damages, cleaning costs or restoration costs detailed in the rental agreement from the total security deposit. Property owners cannot deduct the cost of repairs for pre-existing damages, normal wear and tear, or cumulative wear and tear.

How long does the property manager/owner have to return the security deposit after the lease has ended?

According to the state law of California, the security deposit remainder (after the security deposit deduction has been made, if applicable) must be returned to the renter within 21 days of vacating the property alongside an itemized list of deductions if any exist. The exceptions to this include when a renter is terminating a month-to-month rental, or the rental has no fixed term, or when the landlord is terminating a lease with no fixed term.

What penalties does the property manager/owner face if they do not return the security deposit on time?

Property owners in the state of California that do not provide itemized descriptions of the damages and repair costs to the tenant within 21 days, or whose repairs cannot be completed within the 21 days and do not provide documentation within 14 days after the work is completed, may be subject to legal action from the renter in Small Claims Court.

What is the process for the property manager/owner to claim the security deposit funds?

Property owners in California that want to claim security deposit funds must provide an itemized list of deductions to the renter in written format and deliver it personally or via first class mail and include prepaid postage. If the tenant did not provide a forwarding address, the property owner may address the itemized list to the address of the vacated unit. Property owners may also send the itemized list via email and choose to return the security deposit to the bank account they have on file.

Do California tenants have the right to a walk through inspection?

In California, landlords are able to conduct a walk through inspection on their rental property. This inspection is meant to identify any damages or repairs that need to be done to the rental unit before the tenant moves out, and the landlord can then deduct money from the security deposit if necessary. It is important for landlords and tenants to follow certain steps when conducting the inspection, such as giving written notice to the tenant with at least 48 hours notice before the inspection, and not conducting the inspection any sooner than two weeks before the end of the tenancy. It is also important for the landlord to provide the tenant with a list of any repairs that need to be done before the final inspection.

Is the resident allowed to apply their security deposit towards the last month’s rent?

Tenants in the state of California cannot choose to use the security deposit for their last months’ rent, unless the property owner agrees upon it in writing.

To summarize, California law has multiple regulations concerning security deposits. To ensure that they are not subject to legal action, property owners should always keep an accurate list of property damage incurred after doing an inspection, history of a tenant’s rental payments, and more. Property owners must be able to provide this information to vacating renters upon the termination of their lease.

Updates on California Security Deposit Law: Introducing AB 12

In a significant move to refine and strengthen the rights and responsibilities surrounding security deposits in California, AB 12 was inked into law in October 2023. 

This update is crucial, so here’s a breakdown of the key changes coming into effect by July 2024:

  • Interest-Bearing Accounts for Security Deposits: A notable change is the mandate for landlords to hold security deposits in interest-bearing accounts. This ensures that the tenant’s money is not just sitting idle. At the end of each year, the accrued interest will either be returned to the tenant or adjusted against their rent based on the mutual agreement.
  • Yearly Interest Statement: Landlords must now offer tenants an annual statement detailing the interest earned on their security deposit to enhance transparency. This step ensures tenants are kept in the loop regarding their funds.
  • Penalties for Delayed Returns: While the 21-day window for security deposit returns remains unaltered, the repercussions for breaching this period have been intensified. Landlords will incur an increased penalty every day the return is delayed beyond the 21-day mark, making timely returns more crucial than ever.
  • Embracing the Digital Age: Recognizing the digital shift, AB 12 provisions now allow landlords to use electronic communication methods to deliver itemized statements and accompanying receipts. This, however, is contingent on the tenant’s consent to receive communications in this format.
  • Facilitating Mediation for Disputes: Addressing the common friction point of deposit deductions, AB 12 introduces a structured mediation process. Should a tenant contest a deduction, they can now opt for mediation. Refusal of mediation by the landlord or failure to reach an agreement paves the way for legal proceedings. In such instances, landlords could potentially be responsible for additional damages and attorney fees.

Disclaimer & Sources:

Qira aims to keep this information as up-to-date as possible. The content provided here is informational and should not replace legal counsel. Please refer to the relevant government sources to check for any changes or updates to the law.

kasee-godwin-80x80

Kasee Godwin

Position: Director of Marketing
Social Networks

Kasee is the Director of Marketing for Qira. She has nearly 15 years of experience in the real estate marketing industry, including 10 years on the client side. In her spare time, she enjoys reading science fiction, exploring new wineries, and fostering Golden Retrievers.

Other news

lease-provisions

Security Deposit Alternatives: A Win-Win for Property Managers

The advent of security deposit alternatives is reshaping this landscape, offering a win-win solution for property managers and renters.

Author: Kasee Godwin
Date: 02.22.2024
lease-provisions

The Rental Economy: Understanding the Shift in 2024

Evolving financial trends are defining this shift, challenging traditional investment strategies and demanding a more nuanced approach from industry professionals. The rise of Generation Z renters and a general change in renter demographics are reshaping rental market dynamics. 

Author: Kasee Godwin
Date: 01.25.2024
lease-provisions

The Rise of Gen Z Renters

As Generation Z (born between 1997 and 2012 and aged 12-27) increasingly enters the rental market, their preferences and behaviors are beginning to reshape the multifamily industry.

Author: Kasee Godwin
Date: 01.18.2024
lease-provisions

Artificial Intelligence and Machine Learning in Multifamily Real Estate 

Integrating Artificial Intelligence (AI) and Machine Learning (ML) in the multifamily real estate sector is transforming the industry's landscape. These advanced technologies are reshaping the dynamics for property managers, investors, and renters. 

Author: Kasee Godwin
Date: 01.16.2024
lease-provisions

The Future of Multifamily Housing: Trends to Watch in 2024

As we move into 2024, the multifamily housing sector continues to evolve, shaped by emerging trends that reflect broader social, economic, and technological shifts. 

Author: Kasee Godwin
Date: 01.09.2024
Wyoming Security Deposit Law

Wyoming Security Deposit Law

The state of Wyoming does not limit application fees or security deposit amounts that property owners can collect, and even enables property owners in the state to collect an additional security deposit for utility fees.

Author: Kasee Godwin
Date: 12.15.2023
Vermont Security Deposit Law

Vermont Security Deposit Law

The state of Vermont prohibits property owners from collecting an application fee from renters yet does not limit the security deposit amount the property owners can collect in order to protect themselves from unpaid rent and damages incurred to their property.

Author: Kasee Godwin
Date: 12.14.2023
Idaho Security Deposit Law: What Renters and Landlords Need to Know

West Virginia Security Deposit Law

The state of West Virginia does not have regulations limiting how much property owners can collect for an application fee or security deposit In order to protect themselves and their property from damages.

Author: Kasee Godwin
Date: 12.14.2023

We are a financial services platform for property management

We are a financial services platform for property managers and residents. We help property managers and owners improve cash flow, reduce vacancies and avoid bad debt.

1-3