A frequently asked question among new landlords and real estate investors is about security deposits—specifically, what can be legally deducted from them. On the other hand, first-time renters are equally curious about what their security deposits can be used for. Let’s clear the air and outline what you need to know about this crucial aspect of property management.
How Much Can You Hold as a Security Deposit?
A security deposit serves as a safety net for landlords, protecting against potential damages or unpaid rent. For security deposits in California, the law is quite specific about the amount a landlord can request.
As of July 1st, 2024, the limit is one month’s rent for residential properties. (California Civil Code § 1950.5 (c)(1).) For landlords who are natural persons, or an LLC with only natural persons as members, and own no more than two residential rental properties and each property has no more than four units, the limit is two months’ rent. (California Civil Code § 1950.5 (c)(4)(A).) This ensures that both the landlord and tenant have a clear understanding of the financial commitment involved.
For non-residential properties, California allows landlords to retain a security deposit of up to one month’s rent for up to 30 days to remedy defaults in the payment of rent. (See, California Civil Code § 1950.7; 250 L.L.C. v. PhotoPoint Corp. (2005) 131 Cal.App.4th 703, 715.).
What Can You Deduct From a Security Deposit in California?
Unpaid Rent
One of the most straightforward deductions from a tenant’s security deposit in California is for unpaid rent. If a tenant vacates the property without settling their last month’s rent or any accumulated dues, the landlord is legally entitled to deduct this amount from the security deposit. This ensures that landlords are not left financially vulnerable when tenants leave without fulfilling their rental obligations.
Damage Beyond Normal Wear and Tear
Understanding the difference between normal wear and tear and tenant-caused damage is essential. Normal wear and tear refer to the gradual deterioration of the property due to regular use. Examples include minor carpet fraying, faded paint, or small nail holes in the wall.
On the other hand, damage caused by tenant negligence or misuse is the tenant’s responsibility. Examples include large holes in the walls, broken windows, or damaged appliances. Landlords can legally deduct the cost of repairing such damages from the security deposit.
Cleaning Costs
When a tenant vacates the property, it should be left in the same state of cleanliness as it was when they moved in. If the tenant fails to clean the property adequately, the landlord can deduct the cleaning costs from the security deposit. This may include carpet cleaning, removing trash, or other cleaning services required to make the property rentable again.
Cost of Replacing or Restoring Landlord’s Personal Property
If a rental property includes the landlord’s personal items such as furniture or appliances, and these items are damaged or missing, the cost of repair or replacement can be deducted from the security deposit. For instance, if a tenant breaks a dining table or misplaces the remote control for an air conditioning unit, the landlord has the right to deduct the cost of replacement or restoration from the security deposit.
Additional Deductions
There are other costs that can be legally deducted from a security deposit in California. These include:
- Locksmith Services: If the tenant fails to return the keys, the cost of changing the locks can be deducted. This is part of restoring the property to its original condition, aside from normal wear and tear.
- Pest Control: If there is a pest infestation that arose due to the tenant’s negligence, the cost of extermination can be deducted. However, the landlord must be able to clearly demonstrate that the infestation was caused by the tenant’s actions and was not a pre-existing condition.
Examples of Excessive Damage
To provide a clearer picture, here are some examples of excessive damage that becomes the tenant’s financial responsibility:
- Broken Doors or Windows: Replacing shattered glass or a damaged door frame.
- Stained Carpets: Deep stains from wine, pets, or food that regular cleaning cannot remove.
- Water Damage: Damage caused by leaving windows open during rain or failing to report leaks promptly.
These examples illustrate the kind of extensive damage that goes beyond normal wear and tear and justifies deductions from the security deposit.
Prohibited Deductions
It’s essential to know what cannot be deducted from a tenant’s security deposit. Prohibited deductions include:
- Normal Wear and Tear: Deductions for minor wear and tear, such as small scuffs on walls or loose doorknobs, are not permitted.
- Pre-existing Damages: Deductions cannot be made for damages that were already present when the tenant moved in.
- General Maintenance Costs: Routine maintenance issues, like replacing a light bulb or fixing a leaky faucet, cannot be deducted.
- Unjustified Charges: Any charges that cannot be substantiated with proper documentation are not allowed.
Understanding prohibited deductions helps maintain transparency and ensures that both parties are treated fairly.
Importance of Documenting Deductions
Documenting deductions from the security deposit is crucial for transparency and legality. Landlords should provide an itemized list detailing each deduction, along with supporting evidence such as photographs or receipts. This documentation not only justifies the deductions but also mitigates potential disputes with the tenant.
Timeline for Returning the Security Deposit
In California, landlords must return the remaining security deposit, along with an itemized list of deductions, within 21 calendar days of the tenant vacating the property. This ensures that tenants receive timely refunds and that any disputes can be resolved promptly.
Cover All Your Bases with The Mellor Law Firm
Navigating the legalities of security deposit deductions can be complex, but with a good understanding of your rights and responsibilities as a landlord, you can avoid potential disputes and protect your investment.
At The Mellor Law Firm, we specialize in real estate law and are dedicated to helping landlords manage their properties effectively. Contact us today for expert guidance on all your property management questions.