WHAT IS A SECURITY DEPOSIT A security deposit is any money a landlord takes from a tenant other than the advance payment of rent. The security deposit serves to protect the landlord if the tenant breaks or violates the terms of the lease or rental agreement. It may be used to cover damage to the property, cleaning, key replacement or back rent. Cases seeking return of a security deposit are usually handled in small claims court. No lease agreement may contain a clause characterizing the security deposit as "non-refundable." A landlord cannot demand and receive security in an amount greater than two months' rent for an unfurnished residential unit or three months rent for a furnished residential unit, in addition to the rent paid for first months rent on or prior to occupancy. Any security is to be held by the landlord for the tenant who is a party to the lease agreement. See California Code of Civil Procedure ("C.C.P.") Section 1950.5(b)(1)-(4); C.C.P. Section 1950.5 (c), (d) and (m). THE INITIAL INSPECTION & TENANT'S OPPORTUNITY TO REPAIR Within a reasonable time after either party gives notice of the termination of the tenancy, or before the end of the lease term, the landlord shall notify the tenant in writing of the tenant's right to request an initial inspection of the premises and of the tenant's right to be present during the inspection. This rule does not apply where the tenancy has been terminated pursuant to subdivisions (2) - (4) of section 1161 of the C.C.P. (Holdover tenancies based upon expiration of lease, non-payment of rent or breach of terms and conditions in the lease) No later than two weeks before the termination or end of the lease, the landlord (upon the tenant's request) must make an initial inspection of the premises. The purpose of this inspection is to identify any deficiencies or damages and allow the tenant a right to remedy these deficiencies, consistent with the rights and obligations of the parties under the lease agreement, in order to avoid deductions from the security deposit. If the tenant fails to request an initial inspection, then any duties of the landlord under 1950.5(f) are discharged. If the tenant requests an inspection, then based upon that inspection the landlord must submit to the tenant an itemization specifying repairs or cleaning that are proposed as reductions to be made from the security deposit. The tenant, from the initial inspection until the termination of the tenancy or lease, shall then have the opportunity to remedy the itemized deficiencies. See C.C.P. Section 1950.5(f)(1)-(5). WHEN/HOW DOES THE SECURITY DEPOSIT GET RETURNED After a tenant moves out, a landlord has 21 days to: either (1) return the tenant's deposit in full; or (2) mail or personally deliver to the tenant a written letter explaining why he or she is keeping the deposit; an itemized list of each deduction; and copies of receipts for the charges/deductions, unless repairs cost less than $126 or the tenant waived his or her right to get receipts. If the repairs cannot be finished within the 21-day period, the landlord can send the tenant a good faith estimate of the cost of repairs. Then within 14 days of the repairs being done, the landlord must send the tenant the receipts. If the landlord or an employee or agent of the landlord performed the repair work, then the itemzied statement shall inlcude a description of the work performed, the amount of time spent and the hourly rate charged for the work. The landlord is to mail the itemization and reciepts to the address provided by the tenant. If the tenant failed to provide a new address then the landlord is to mail the itemization and receipts to the tenants vacated unit. See C.C.P. Section 1950.5(g)(1)-(6). WHAT CAN THE LANDLORD DEDUCT FROM THE SECURITY DEPOSIT A landlord can deduct from the tenant's security deposit the cost of fixing any damages to the property caused by the tenant or the tenants guests, excluding ordinary wear and tear; the cost of cleaning the unit when the tenant moves out, but only to make the unit as clean as it was when the tenant moved in, less reasonable wear and tear; and any unpaid rent, including rent owed if the tenant does not give the landlord the proper notice the he or she is moving out. The landlord is permitted to withhold from the security deposit only that amount which is necessary and reasonable, and not a result of "ordinary and reasonable wear and tear." For example, a landlord may not make a tenant pay for new painting, new carpets, or curtains UNLESS they are damaged beyond ordinary and reasonable wear and tear. The landlord also cannot use the tenant's security deposit to repair problems that existed in the unit prior to the tenant moving in. See C.C.P. Section 1950.5(e) WHAT CAN THE TENANT DO IF THE LANDLORD DOES NOT RETURN ALL OR ANY OF THE SECURITY DEPOSIT If a landlord does not return the entire amount of the tenant's security within 21 days as required by law, and the tenant disputes the deductions from the deposit, then the tenant can write a letter to the landlord explaining why he or she believes he or she is entitled to a larger refund. The tenant should keep a copy of the letter for his or her own records. If the tenant and the landlord are unable to reach an agreement on the amount of the security deposit to be returned, the tenant can file a lawsuit against the landlord for return of the security deposit. The tenant can sue for the amount of the security deposit AND twice the amount of the security deposit in damages. The judge may give the tenant these additional damages if the landlord retained the deposit in bad faith. The tenant can prove payment of a security deposit by any credible evidence, which is normally shown through a cancelled check or a lease agreement stating the amount demanded for a security deposit. See C.C.P. Section 1950.5(l), (n). WHEN THE LANDLORD'S INTEREST IN THE PREMISES IS TERMINATED Upon the landlord's termination of interest in the premises, either by death, sale or otherwise, the landlord has no obligation with respect to the tenant's security deposit if the landlord, or the landlord's agent does the following: (1) transfers the security to the landlord's successor-in-interest and personally notifies the tenant; or (2) returns the security to the tenant, minus any lawful deduction. If the landlord fails to adhere to the requirements stated above, the landlord and the landlord's successor-in-interest are jointly and severally liable to the tenant for the security deposit, minus any lawful deductions. The landlord's successor-in-interest may not require the tenant to post additional secuirty unless the successor first makes restitution for the initial security deposit or provides the tenant with an accounting of all lawful deductions. However, if, after reasonable inquiry and investigation, the successor forms a good faith belief that the lawfully remaining security deposited is transferred to him or has been returned to the tenant, then the successor is not liable for damages or for security not transferred pursuant to 1950.5(h).
See C.C.P. Section 1950.5(h) - (j)