Friday, March 9, 2012

How much security deposit can I collect on my residential income property?

Under California law the security deposit cannot exceed the amount equal to two months’ rent for an unfurnished unit and three months’ rent for a furnished unit.  If the tenant has a water bed, the security deposit can be increased in the amount equivalent to a half months’ rent.

The security deposit may be called last month's rent, security deposit, pet deposit, key fee, or cleaning fee. The security deposit may be a combination, for example, of the last month's rent plus a specific amount for security. No matter what these payments or fees are called, the law considers them all, as well as any other deposit or charge, to be part of the security deposit.

The only exception that the law allows is an application screening fee. The landlord may require a tenant to pay an application screening fee to cover the cost of obtaining information about the tenant, such as checking references and obtaining a credit report.

A California lease or rental agreement cannot say that a security deposit is nonrefundable. This means that when the tenancy ends, the landlord must return to the tenant any payment that is a security deposit, unless the landlord properly uses the deposit for a lawful purpose. Unpaid rent, damage to the rental unit beyond normal wear and tear, or cleaning a unit that was not left as clean as when the tenant moved in, are the most common lawful purposes for retaining a portion or all of a tenant’s security deposit.

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