Key Takeaways
- Security Deposit Limits Apply – In California, security deposits are generally capped at one month’s rent, with some exceptions allowing up to two month's rent. Pet deposits are allowed but must remain within the overall state limit.
- Rules for Deductions and Returns – Landlords can only deduct for unpaid rent, excessive damage, cleaning, or agreed restoration costs. Security deposits must be returned within 21 days of move-out, with tenants given the option to repair damages before charges are applied.
- Transfer and Compliance Requirements – If a rental property is sold, the security deposit must be transferred to the new owner with a written statement. While California doesn’t require special accounts for deposits at the state level, some cities may impose additional rules onto landlords.
As a landlord in San Diego, you have a legal obligation to observe certain security deposit rules if requiring them from tenants. The rules define anything from how much you can hold, to the deductions you can make, to when you must return it to the tenant, and everything in between.
There are repercussions for landlords who fail to follow any of them as well. Specifically, there can be hefty civil fees, court, and attorney fees. Not to mention the impact that would have on your reputation as a landlord.
With that in mind, Uplift Property Management is here to teach you everything you need to know regarding California security deposit laws.
Is there a Limit to How Much a Landlord Can Charge Tenants?
Some states laws limiting security deposits to one month's rent, while others don’t. California belongs to the former group of states, and limits security deposits to a maximum of a month’s rent.
Some exceptions do exist, however. A landlord can charge tenants up to 2 times the monthly rent if you meet all the following conditions.
One, you own more than two rental units where you rent out four units or fewer, or you rent out unfurnished units. Two, you are the sole owner of the four rentals, or you operate them through an LLC with other members. And three, you aren’t a member of any federal armed services.
Are Additional Pet Deposits Allowed in California?
You can require the tenant to pay a pet deposit in addition to the base security deposit amount. The only exception to this is for residents with service dogs or emotional support animals.
This is because disabilities are a protected class under the state’s Fair Housing Laws. Other protected classes include sex, nationality, familial status, and sexual orientation. You must treat the tenant fairly regardless of such characteristics.
Make sure that the total deposit doesn’t exceed the state’s security deposit limit. Landlords must also not try to circumvent this requirement by calling the pet deposit names like “damage deposit” or “pet deposit” in the lease.
How are Landlords in California Required to Hold Tenants’ Security Deposits?
Landlord-tenant law in some states require security deposits to be stored in a particular manner. For example, in interest-bearing accounts, or by posting them as bonds. Other requirements can be to keep them separate from the landlord’s own funds.
But does California have any such requirements? No! At the state level, there are no requirements for landlords to store their tenants’ security deposits in any special way.
You may, however, want to check in with your municipality for any additional requirements in this regard. For instance, some local cities like Los Angeles and San Francisco require landlords to store tenants’ deposits in interest-bearing accounts and return the security deposit interest to the tenant.
What Must Landlords Do After Selling Their Rental Property?
If you happen to sell the rental property, you’ll need to transfer the security deposit to the incoming landlord, less any allowable deductions. The incoming landlord will then have a duty to keep it per the state’s security deposit rules.
Before you finalize the sale, you must provide the incoming landlord with a written statement. The statement must contain the following information.
- The security deposit amount, less any allowable deductions.
- An itemized list of deductions (if any).
- Where the tenant’s security deposit is, whether transferred to a new account or returned it to them.
What Deductions Can a Landlord in California Make from a Tenant’s Security Deposit?
Under the California landlord-tenant law, landlords can make the following deductions from a tenant’s security deposit after they move out.
- Any unpaid rent.
- Cost of fixing damage exceeding normal wear and tear.
- Cost of professionally cleaning the unit.
- Any restoration costs mentioned in the lease agreement.
Also, it’s important to note that there is no legal limit on the amount of charges a landlord can make. The only requirement is that the charges be reasonable. And if the tenant’s security deposit doesn’t cover all the charges, landlords can seek the extra charges from the tenant.
What Is the Difference between Normal Wear and Tear and Damage?
Security deposit deductions are usually a point of conflict between landlords and tenants so it's a good idea to lay everything out clearly in the lease.
The tenant may move out thinking they have left the unit in good condition, but the landlord may hold a different view and charge the tenant for certain issues via a deduction to the security deposit. Consequently, the tenant may consider legal action against the landlord for unjust deductions.
As a landlord, knowing the key differences between these two types of damage is key to a smooth landlording experience.
Examples of normal wear and tear include gently worn carpets, stained bath fixtures, loose door handles, and faded paint. As for damage exceeding normal wear and tear, it includes holes in the wall, missing fixtures, and broken tiles.
When Must Landlords Return their Tenants’ Security Deposits?
In California, security deposit laws allow landlords up to 21 days to return their tenants’ security deposit at the end of the lease, less any allowable deductions.
But before making any charges, landlords must allow the tenant to make the repairs themselves. Landlords must also give them the option of having the unit inspected before they move out.
Bottom Line
Now you know what you can and cannot do when it comes to the tenant’s security deposit. As a landlord, you may also want to check for any additional requirements at the city level for utmost compliance.
If you have a question about security deposit laws, landlord tenant law, or need expert property management services, look no further than Uplift Property Management. We can help your San Diego rental property reach its full potential. Get in touch to learn more!
Disclaimer: Please note that the information provided in this blog is intended for general guidance and should not be considered as a replacement for professional legal advice. It is important to be aware that laws pertaining to property management may change, rendering this information outdated by the time you read it.
