This is only your side of the story. The tenant has a different story. I think the only issue is whether or not you complied with the statutes or made improper deductions from the deposit. The walk-through, or lack of it, I believe only goes to proof. Check out this link to the CA Dept. of Consumer Affairs -- it may help you decide on your best course of action: http://www.dca.ca.gov/publications/landlordbook/sec-deposit.shtml
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It seems to me that you did what you should have to comply with the law. Only if there is a legitimate argument that your assessments for damages/repairs was grossly and intentionally inflated might they have an argument that you acted in bad faith. They're trying to argue "bad faith" because if successful, they could be awarded double the amount of their security deposit. It almost never works and I don't think they have a good argument in that respect given the facts you recite.
Kevin King, Principal- Essential Law Services. HTTP://ESSENTIALAW.COM, 415-562-6862. The information presented here is general in nature and is not intended and should not be construed as legal advice for a particular case. This post does not create any attorney-client relationship with the author of the question answered. For specific advice about your particular situation, consult with me or another qualified attorney off-site.
You did an accounting. I have never seen bad faith found where there has been an accounting. The only problem I see is the tardiness of the receipts. They or estimates are due within 21 days. Still, I don't see bad faith as an issue, and this assumes that the security deposit accounting didn't include charges to remodel the unit on the former tenant's dime.
A proper response would require a thorough investigation into the history and background of this relationship. The information provided above is just that, information, to be used as you see fit.
The bad faith retention of security deposit law, Cal Civil Code Section 1950.5 states that you have 21 days to return the security deposit in full, or less with an itemization. If you do not have all your receipts within 21 days, you can still send the bulk of the report with ESTIMATES and follow-up within 14 MORE days with actual receipts. If this was done, then you SHOULD be safe.
But as other have said, this is only one side of the story and it is difficult to know what actually did happen. Just be sure to plan accordingly for your trial and lay a road map/timeline for the judge to see what happened.
You should contact an attorney that knows about small claims to prepare you for your trial.
-Adam Jaffe Law Office of Adam Jay Jaffe PO Box 2437 Camarillo, CA 93011-2437 (805) 504-2223 www.smallclaimsappeals.com Adam@SmallClaimsAppeals.com This posting is provided for “information purposes” only and should not be relied upon as "legal advice". Nothing transmitted from this posting constitutes the establishment of an attorney-client relationship. Applicability of the legal principles discussed here may differ substantially in individual situations or in different states.