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California Law Regarding Rental Security Deposits

 
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California Law Regarding Rental Security Deposits

Prepared By: Melissa C. Marsh, Los Angeles Landlord-Tenant Attorney
Written: March 2009 - Last Updated: August 2013
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California Civil Code Section 1950.5 governs security deposits in the state of California, but if your rental unit is under rent control you may have additional protections beyond those stated in this article.

1. All Security Deposits Are Refundable, Even If The Lease Says Otherwise.
Pursuant to California law, the total security deposit (including last month's rent, a processing fee, a cleaning fee, etc..) cannot exceed two month's rent for an unfurnished apartment. California Civil Code Section 1950.5(m) prohibits any rental agreement, or lease, from characterizing a security deposit as "nonrefundable." There is no such thing as a non-refundable security deposit no matter how it is characterized (last month's rent, move-in fee, pet deposit, key deposit, etc…). All money paid by a tenant beyond the first month's rent is refundable.

When a tenant moves into a rental unit, the tenant should take detailed pictures evidencing the condition of the rental. Pictures should be taken close up with a quarter serving as a metric, and from a distance. In addition, the tenant should write down any damage and report it to the landlord via a dated written letter. Keep a copy for your records along with proof of mailing.

When a tenant provides his or her 30 day written notice that she or he plans to move-out, the tenant should also request a walk-through. Regardless of whether a walk-through is or is not provided, the tenant should again take detailed photos of the rental at move-out.

2. Interest May Be Owed On A Tenant's Security Deposit.
Although California state law does not require a California landlord to pay a tenant interest on the retained security deposit, 15 rent-controlled cities do require landlords to pay interest on the security deposits they collect from their tenants, which includes the last month's rent if you have lived in the rental for at least one full year. Only three of these rent-controlled cities specify the interest rate to be paid, including: Los Angeles (1.76% for 2009; 0.55% for 2010), San Francisco (3.1% for 2009), and West Hollywood (0.5% for 2008 and 2009). Santa Monica is considering new legislation.

In the city of Los Angeles, since 2004, interest payable to tenants in rent controlled units may be determined in one of two ways: 1) the simple interest rate established by the Rent Adjustment Commission (See Chart Below); or 2) the actual amount earned on the security deposit. If the second method is selected by a landlord, the the landlord must provide the tenant with a copy of a bank statement indicating the interest earned on their deposit for the year. If the landlord did not place the security deposit in an interest bearing account, then the simple interest rate established by the Rent Adjustment Commission must be applied.

For rent controlled units in Los Angeles, the historical Interest Rates That Must Be Paid Are:

Annual Interest By Year
Years Annual
Interest Rate
11-01-1990 through 12-31-2000. 5%
2001 2%
2002 0%
2003 1%
2004 0.26%
2005 1.21%
2006 1.74%
2007 2.39%
2008 3.22%
2009 1.76%
2010 .55%
2011 .29%
2012 .22%
2013 .15%

If a landlord fails to pay a tenant the required interest, the tenant may bring an action in a court of appropriate jurisdiction (Small Claims Court typically) to recover the amount owed as provided in Rent Stabilization Ordinance 151.06.02 (G)

If you live in an incorporated city in Los Angeles County, you may have to call your city's rent control board:

Santa Monica:    (310) 458-8751

West Hollywood: (323) 848-6450

Beverly Hills:   (310) 285-1031

3. Tenants Should Take Pictures (A Lot Of Them) Before Move In and Move Out.
Before more-in and move-out, a tenant should take pictures of everything (the building, each room, the doors, windows, and every defect whether noticed by the landlord or not. Defects (holes, chips, cracks, and other damage) should be captured at a distance and close-up with an object like a quarter to put the size of the defect in perspective. Taking pictures prior to move-in and move-out can serve as proof that you left the rental unit in substantially the same condition as it was presented when first occupied.

Tenants - you are not required to paint, or fill holes, unless you painted the walls another color or your lease prohibited the hanging of pictures.

4. Give Proper Notice Of Intent to Move Out and Demand a Walk Through.
All tenants are required to give a landlord 30-days Written Notice of the tenant's intent to move-out. This is true for tenants who have signed a one year lease, and for tenants who are month-to-month. If a tenant fails to provide the requisite 30 days written notice, the landlord may be able to deduct "unpaid rent" from the tenant's security deposit, unless the rental unit is immediately re-rented.

At the time the tenant provides the landlord with a 30-day notice to vacate, the tenant should also demand the landlord perform an inspection of the rental unit two weeks prior to the move-out date. The purpose of the walk through inspection prior to move-out is to give the tenant the ability to repair any conditions that may cause a deduction from the tenant's security deposit.

If you know where you will be moving, in your Notice of Move-Out be sure to provide your landlord with your new address.

5. A Tenant's Security Deposit Can Only Be Used For Certain Items.
California Civil Code Section 1950.5 only permits a landlord to use a tenant's security deposit to pay for the costs of: (1) unpaid rent; (2) cleaning the rental unit after you vacate (but only to what it was before you moved in); (3) repairing damage caused by the tenant that goes beyond normal wear and tear; and (4) if provided in the lease, replacing keys, laundry cards, garage openers, etc.

If a tenant returns the rental in substantially the same condition in which it was rented (less reasonable wear and tear), the landlord must return the entire security deposit. A landlord cannot deduct for painting, or steam cleaning, or replacing the carpets, unless there was serious damage. The landlord is allowed to deduct the cost of cleaning if necessary, but only if necessary to put the rental unit back to the same level of cleanliness it was in at the time the property was leased.

6. Breaking a Lease, or Providing Less Than 30 Days Prior Written Notice.
If a tenant needs to move-out before the end of a written lease, the tenant should immediately inform the landlord in writing. This notification should state the intended move-out date and the reason the tenant is moving. The tenant should also request the landlord immediately seek to re-rent the premises and that the tenant will be placing an ad on www.craigslist.com to increase the chances of finding a suitable replacement tenant.

The tenant should also be aware that absent a written agreement with the landlord to the contrary, the tenant will be responsible for paying rent on the apartment until the apartment is re-rented, or the lease expires, whichever occurs first.

7. Last Month's Rent.
California law does not permit a tenant to use his or her security deposit as a replacement for paying the last month's rent. If the lease states that the tenant paid first month's rent and "last month's rent" and a security deposit, then the tenant is relieved of paying the last month's rent. If, on the other hand, the lease states that the tenant paid first month's rent and "security for last month's rent" then the tenant is still required to remit payment of the last month's rent.

8. A Tenant’s Security Deposit Must Be Returned Within 21 Days of Move Out.
California Civil Code Section 1950.5(g)(2) requires all California landlords to return a tenant's security deposit within 21 days of move-out either in full, or partially. If any deductions are taken from the tenant's security deposit, the partial refund check must be accompanied by: (1) a written itemized statement that lists the amounts deducted from the security deposit and the reasons for the deductions, and (2) if the deduction exceeds $126, copies of receipts for the charges incurred to repair or clean the unit. Make sure you provide your landlord with your new address. If you did not provide your landlord with your new address in your written notice of intent to vacate, write down your new address on any move-out inspection checklist, or email your new address to the landland shortly thereafter.

If the security deposit is not returned within 21 days, if the tenant disagrees with the amounts deducted, or if the tenant did not receive an itemization accompanied by receipts, the tenant should send a letter to the landlord via certified mail return receipt requested. If the landlord does not respond within a reasonable time (7 to 10 days), the tenant should then file a claim in Small Claims Court for the actual security deposit withheld and statutory damages of two times that amount pursuant to California Civil Code 1950(i). Consider meeting with an attorney prior to filing for advice on preparation and presentation of your claim.

Have a few additional questions? If you would like additional information and/or assistance from a Los Angeles California landlord tenant attorney, Melissa C. Marsh, please schedule a telephone consultation for as little as $69* by completing our Telephone Consultation Request Form and Melissa Marsh will call you back at the time you select.


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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.