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2014-02-20 12:53:18
Landlords & Property Investments

California Security Deposit Law

As a landlord of rental property in California, it is important to understand the specific laws that apply to the state. While there are certain security deposit rules that govern the state of California as a whole, the city or county in which your rental property is located may have additional or different laws, so you should also check with your local government to be sure you are following the correct protocols.

Is There a Security Deposit Limit in California?

 

In California, you can ask for a maximum of two months’ rent if the property is unfurnished. If the property is furnished, you can ask the tenant for a maximum of three months’ equal to the rent (do not call it rent) as a security deposit.

Can You Charge a Non-refundable Deposit?

 

No, in California, you cannot classify a security deposit as non-refundable.

How Must You Store The Security Deposit in California?

 

In California, the landlord is responsible for storing the tenant’s security deposit, but there are no specific rules for doing so. The landlord does not have to hold the security deposit in a separate bank account and is not required to pay the tenant interest on the security deposit.

 

Is Written Notice Required After Receipt of the Security Deposit in California?

 

In California, the landlord is not required to provide the tenant written notice after receipt of the security deposit.

 

What Are Some Reasons You Can Keep a Tenant’s Security Deposit in California?

 

In California, you may be able to keep all or a portion of a tenant’s security deposit for the following reasons:

 

   Tenant defaults on rent payment.

   Damage to the property in excess of normal wear and tear.

   Cleaning costs to restore the unit to the condition it was in at the beginning of tenancy.

   To pay any future debts that may be incurred due to tenant's violation of lease.

 

The landlord cannot keep the deposit to cover ordinary wear and tear or to pay for conditions that existed before the tenant moved into the unit.

When Must You Return a Tenant’s Security Deposit in California?

 

A California landlord must return the tenant’s security deposit within 21 days of tenant move-out. This notice must include an itemized statement indicating:

a. The amount of security deposit received.

 

b. Any itemized deductions- If deductions have been taken from the security deposit, the landlord is required to provide documents and receipts showing the actual charges that were incurred- materials, labors, cost of hiring someone to do the work, etc. If the work has not yet been completed, the landlord is required to deduct a good faith estimate as to the cost of the work.

 

c. The amount of security deposit that is being returned to the tenant.

What Happens to the Security Deposit If You Sell Your Property?

 

In the event that you sell your investment property, the landlord has two options:

 

   Transfer the security deposit, less any deductions, to the new owner. The landlord is then responsible for notifying the tenant in writing of the name, address and phone number of the new owner and is responsible for providing written notice to the both the new owner and the tenant of the amount of security deposit and any deductions they have taken from the security deposit.

 

   Return the security deposit, less any deductions, to the tenant. The landlord must still notify the new owner in writing of the amount of the security deposit, any deductions that have been taken and the landlord’s decision to return the deposit to the tenant.

 

 
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