Security Deposits

Holding Deposits

Q. Must a landlord refund a deposit, which was left to hold a rental unit, if one of the parties changes their mind?

A. It depends on who changes their mind. If the landlord decides not to rent to the prospective tenant, then the deposit should be refunded in full.  If the prospective tenant changes their mind, then usually the landlord may keep the some or all of the deposit, up to the extent they are damaged by the tenant’s breach of the agreement.  The landlord should make a good faith attempt to minimize their damages by locating another tenant as quickly as possible.
Note: If the landlord can immediately re-rent the unit and loses no rent as a result of the tenant backing out of the deal, then the tenant should get their money back. The landlord can retain an amount equal to the rent they lose, plus the cost of advertising the unit again, if any.

Security Deposits
Civil Code Section 1950.5

Q. How large a security deposit can a landlord require?
A. In an unfurnished rental unit the landlord can require up to two times the monthly rent as security, although most landlords require less.  In a furnished rental unit, the landlord can require up to three times the monthly rent as security.  Everything paid to a landlord at move-in, other than rent, is considered security and is potentially 100% refundable.

Q. What charges can a landlord deduct from the security deposit?

A. A landlord can charge a tenant for cleaning, unpaid rent, and damage to the rental unit beyond normal wear and tear. Tenants are required to leave the unit as clean as when they moved in. This includes carpets, drapes, miniblinds, ovens, etc.  If the unit was dirty when the tenant moved in they are under no obligation to leave it clean.  Tenants are required to pay for damage, but not normal wear and tear, to the unit occurring during their tenancy. Pre-existing damage cannot be charged to present tenants.  Normal wear and tear is the degradation of a unit that occurs through its regular use.  Examples of normal wear and tear could be: the natural discoloration of walls over time or as a result of poor air quality; the “matting” down or wear of pile of carpeting in high traffic areas (not dirt); warping doors or windows; minor chipping of paint or scratches on counters; and any other aging from normal use that results in depreciation of the property.


Q. How long does a landlord have to refund a security deposit?
A landlord must send the tenant an itemized accounting of the amount retained from the security deposit and/or refund the deposit not retained within 3 weeks of the date a tenant vacates the unit. That is generally true, but the law now allows the landlord to send an interim accounting within that time if he has more work to be done and more deposit to account for. Then he needs to send a final accounting within 14 days of completion.

Q. What can a tenant do if the landlord keeps all or a portion of the deposit and the tenant disagrees with the charges?
A. If a landlord fails to return a security deposit or keeps a portion of the security deposit and the tenant disagrees with the charges the tenant can write the landlord a letter of demand. The demand letter should be sent certified mail, return receipt requested. The tenant should retain a copy for their records. If the landlord does not respond to the letter of demand within 10 days, the tenant can file an action in small claims court. If the tenant can prove that the landlord’s retention of the security deposit was willful the tenant could be awarded up to twice the amount of the security deposit.

Q. How can disputes over security deposits be avoided?
A. Keep copies of all rental records in one place. Showing that a tenant has the right to a return of security deposit requires preparation in advance. Start during a walk-thru just before you actually move in, even if the tenant was required to sign a lease or rental agreement that recited that the unit was in perfect condition. Make a list of the conditions in each room/area and have you and your landlord sign it. If the landlord won’t sign it, make sure you date it and give the landlord a copy. You can take pictures of the conditions before you move in so that the landlord cannot claim you damaged the items when you move out. By law, the landlord must conduct a walk-thru of the unit before you return the keys. The landlord is supposed to give a resident notice that he has the right to a “pre-move out” inspection within the last two weeks of tenancy. During the walk-thru, make a note of any complaint made by the landlord and fix/clean the problem before you turn the keys in. Take pictures of the things complained of after you fix them. Finally, after you have completely moved out, take pictures of each room/area showing the move out condition. Give the landlord a dated letter explaining what you did to fix any complaints and an address where to send your security deposit. Keep a copy of the notes and letters.

Q. Can a tenant use the security deposit for the last month’s rent?
A. A tenant may NOT use the security deposit as the last month’s rent without the landlord’s approval. Even if the lease or rental agreement separates the deposit and clearly indicates last month’s rent paid in advance. The law considers it all as security and cannot be used as last month’s rent without the landlord’s approval.

Q. What if the landlord sells the unit?
A. A landlord must transfer all security deposits to the new owner of the rental unit or refund to the tenant the security deposit less any legal deductions. If the landlord does not return the deposit to the tenant, the tenant may, upon vacating the unit, demand either the old or new landlord refund the deposit. If the old landlord returns the deposit to the tenant, the new landlord may require the tenant to post another deposit. If the old landlord does not return the deposit to the tenant, the new landlord may not require the tenant to post more than the maximum allowable deposit. The total deposit would include any amount given to the old landlord, whether or not transferred to the new owner.

Security Deposits-California Department of Consumer Affairs

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