Security deposits differ from state to state, however the security deposits laws in California tend to more particular than any other states in the country. The following topics of security deposit law in California covers the questions: what the security deposit could be used for, what the deposit limitations are, when you need to return a security deposit, and the typical deposit amounts.
Typical Security Deposit Amount
While there’s no general rule on how much one should require for a security deposit, ie. one month or two months of rent up front, the typical security deposit amount is no less than one month. As a landlord, you’ll need to assess the amount of risk you are willing to accept with your tenants, as the security deposit is one of the few instruments used to safeguarding your rental property in case of damage or loss of rent.
California Security Deposit Coverages
There are strict rules on what a security deposit can and can not cover in California. For example, should a tenant default in payment of rent, the security deposit could be used to cover the loss of rent. However, the security deposit should not be used lightly, as to aid a tenant whenever he or she has a hardship in paying rent. Similarly, the security deposit cannot be used to pay the last month’s rent.
On the other hand, as a landlord, you cannot deduct from the security deposit to improve upon the existing conditions of the rental property. For example, you cannot use the security deposit to replace the flooring with hardwood floors or upgrade the kitchen countertops to granite countertops.
Here is a list of items that security deposit could be used for:
To cover any defaults on rent payment.
To repair any damages on the unit that exceeds normal wear and tear.
To cover any cleaning costs to restore the unit to the original pre-tenancy condition.
To repay any debts outlined in the lease agreement.
California Security Deposit Limitations
There are no minimum security deposit requirements, so in practice, you could rent to your tenants without requiring a security deposit at all (this would be unwise!). However, in California, there are maximum limitations to which you could require depending on your rental property situation:
If your rental property is furnished, the max amount of security deposit allowed is two month’s rent.
If your rental property is unfurnished, the max amount of security deposit allowed is three month’s rent.
California Nonrefundable Deposits and Fees
Specifically for California, landlords are not permitted to charge non refundable deposits or fees such as a mandatory cleaning fee.
Other fees such as an application fee, which is used to do a background and personal reference check is permitted and is considered nonrefundable. The reason being is that an application fee does not fall under the the security deposit category.
Requirements for Increasing the Security Deposit in California
For fixed term lease, you cannot raise the security deposit during the term of the lease, unless it is specifically stated in the lease agreement. For a month to month tenancy, security deposit may be increased with a written notice 30 days in advance. The limitations of security deposits still apply.
California Deadlines and Requirements for Returning a Security Deposit
For California, there are two important criteria for handling security deposits after a tenant has vacated the property and surrendered the keys:
Security deposits must be returned within 21 calendar days after the tenant has vacated the rental.
If the amount of the security deposit returned is less than the original amount collected, the landlord must include an itemized statement of deductions. This is a line by line breakdown of the costs for repairs, cleaning, and other deductions.
If a deduction in the security deposit is made at anytime during the tenancy, an advanced notice and itemization of such deductions must be issued to the tenant prior to returning the deposit.
Maintaining Security Deposits in California
There are no requirements for maintaining the security deposit in a separate bank account.
A walk through inspection is not required, but it is often recommended to do so to assess whether any deductions will be made on the security deposit before the tenant relinquishes the property. Usually the walk through is conducted no earlier than two weeks before the tenant vacates the unit, however ideally this is done after the tenants have moved out all the furniture and has cleaned the rental. It is important to conduct a walkthrough with the tenant present so that he or she understands and is aware of the specific charges that will be deducted from security deposit, if any.
Typical Pet Security Deposit
Should you decide to permit pets in your rental property, you are allowed to charge a pet security deposit. Depending on the size of the dog and how well behaved it is, the typical pet security deposit ranges between $100 and $600. However, charging half a month security deposit is not uncommon.
Pet Security Deposit Limitations and Fees in California
There are no limitations on the pet security deposit. However, the only exception to this is that the pet security deposit and the rental security deposit must be less than the total sum of the maximum security deposit allowed. For example, for an unfurnished residence, the combined pet security deposit and rental security deposit should not exceed two month’s rent.
Similar to the nonrefundable deposit and fee regulations, landlords can not charge non refundable pet fees such as a monthly carpet cleaning fee.
Legal Citation on California Security Deposit
California Civil Code §§ 1950.5 and 1940.5 (g)