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Common Questions About Security Deposits in California

Landlords often aren’t sure what they can charge vacating tenants for. We’re here to answer the most common questions we get about security deposits.

If you’ve ever rented an apartment or a house, you’ve probably had to put down a security deposit. This deposit is put down to cover any excessive damage that may occur to the property during tenancy, from paint chipping to carpet cleaning.

However, many property owners aren’t exactly sure what they can charge for. The term “normal wear and tear” gets thrown around a lot in this industry. It’s important to know what things like this mean and how it affects you, your home, and your tenants.

At Good Life, we get questions relating to these deposits every week. We know that the process can be confusing and difficult to navigate, especially when you aren’t familiar with the laws. Luckily for you, we’re here to tell you everything you need to know about security deposits.

Is there a limit to the amount of a security deposit?

Yes. The amount depends on whether or not the rental is furnished. For an unfurnished property, a landlord cannot charge more than twice the amount of a month’s rent. For furnished properties, you cannot charge more than three times the monthly rent.

This amount is separate from the first month’s rent. For example, if you choose to charge a month’s rent for the deposit and the rent is $2,000, the tenants will pay $4,000 at move in.

Additionally, we recommend that the security deposit to be a different amount than the rent. If the rent is $2500, the security deposit should be less or more than that. This is because when the time comes for the tenant to move out, they may try to use the security deposit as their last month’s rent if the amount is the same. Having a unique deposit prevents this from happening. 

What can I use the deposit for?

In California, you can only use the security deposit for the following things:

  • Unpaid Rent
  • Cleaning Fees
  • Repairs
  • Replacing Personal Property

The deposit is used to repair and clean items that exceed normal wear and tear. When a lease is signed, it typically specifies that the unit needs to be returned in the condition it was given in. The deposit can be used to accomplish this if the tenants left it in a worse condition.

What is normal wear and tear? Landlords are often not sure where to draw the line when it comes to this. There is expected damage that comes with living in a property, i.e. light wall scuffing from furniture, small nail holes, worn carpet, etc. These things are considered normal wear and tear.

Because these kinds of things are expected, you don’t want to charge the tenant for them. They will likely refute it and you don’t want to go to small claims court over a few wall scratches.

Tenant damage is classified as damage that is outside the realm of what is expected. This includes hardwood floor scratches, drawings on walls, chips in tile/glass, and carpet stains. These can all be charged to the deposit and if it goes over the deposit amount, you can charge them the remainder.

You can also use the security deposit for unpaid rent and cleaning charges. These cleaning charges would be used in order to bring the property back to the condition it was at move in.

What is useful life?

Useful life determines when a part of the home, such as carpet or paint, needs to be redone entirely. Even a great paint job only lasts a few years and this alters how much you should charge your tenants.

The expected life for paint is usually 3 years, depending on the property. At Good Life, we charge tenants that have been at the property for one year ⅔ of the paint cost. If one wall costs $100 to repaint, the tenant is charged $66.

There is no set law regarding the calculations, but going on a 3-year life for paint is fairly standard throughout the industry. Apartment complexes sometimes do a 2-year life, i.e. a one year tenant is charged $50 for the $100 wall. For more information on the life of other features in the home, check out this Fit Small Business article on normal wear and tear for rental properties.

How do I inform the tenant of their charges?

Once the property has been assessed and repairs have been made, you will need to send an invoice to the former tenant. If the charges exceed $126, an itemized receipt needs to be given with invoices from the contractors used. This will show a breakdown of everything that was charged and why.

It’s best to take photos of the apartment before the tenant moves in and after they leave. That way, if the tenant asks where the carpet is damaged, you have evidence to back you up.

Within 21 days of move out, you need to send the tenant the remaining (or full) deposit with the invoice and explanation of charges. Without this, you could wind up having to return the funds or go to small claims court.

What if the work can't be completed within 21 days?

If the necessary repairs cannot be completed within the 21 days, you may provide the tenant with a good faith estimate. This is a rough breakdown of the expected repairs and costs along with the expected refund of the deposit.

Once the work has been completed, you must notify them within 14 days and adjust the return amount if needed.

Can I charge a pet deposit, too?

A pet deposit can be charged to cover damage expected from a pet living in the home. It is best to add this to the total deposit you are charging, rather then calling it a separate pet deposit. The reasoning for this is because if you call it a pet deposit, you can only use it for pet-related damage. For example, if you plan to charge a normal deposit of $1,000, then they inform you that they have a pet, you would add the additional deposit to the $1,000. Pet deposits usually are usually between $200-$500.

However, this amount cannot exceed the rules outlined above. If you want to charge them an extra $500 deposit for a pet, this can’t be more than twice the rent for unfurnished and three times the rent for furnished.

Final Thoughts

We hope this article answered all of your questions pertaining to security deposits. 

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Alright, spin the wheel. We’re going to have destiny. Throw your lunch in the trash. Well, luckily you don’t have to do that. But if you were something that worked here, you may have to do that if you’ve been to many mistakes, not really. I’m dead serious, but not really. But anyway, this is a metaphor. We’ll have destiny for some property owners. You know, are you a rental property owner? Then you’ve dealt with security deposits before. And what a lot of owners do is they basically metaphorically spin the wheel of destiny when they’re doing their tenant security deposit. Because a lot of times, if it’s not done properly, it’ll get you pulled into court. So today, we are talking about three things most landlords don’t know about tenant security deposits. And I want to welcome you to the rental property owner show. It’s Tuesday. It’s a great day. It’s 241, I think, in the afternoon. And we’re excited to have you here. So thank you for everyone who watches. And if you’re watching in replay, thank you so much for watching. And we love your comments and your feedback. So please let us know if you have any questions or comments. And please, you know, just let us know. We appreciate you being here. So my goal is to improve the lives of not just property owners, but also tenants through professional property management services and educating the public on how to do things right so that it creates a win-win-win for everybody. We want to raise the overall consciousness and kill off some of the old school. You know, it’s just a tenant. Some of the old school landlord theory that doesn’t really work this day and age. So we appreciate you being here. And thanks so much for being a part. So what you’re going to learn today, like I said, is three things that most landlords do not know about tenant security deposits. And so the first thing I want to go over is that if you charge a tenant security deposit for more than $125, you must include a copy of the invoice. And not only that, the invoice must have the contractor’s name a place to reach them, like a phone number, the contact information, and obviously a total. And so if it’s up to $125, you don’t, but it’s always a good idea just to do it anyway. So that’s the first thing I see a lot of owners, self-managing owners, that will just send them the check with like a handwritten note. You have to provide accurate accounting. So that’s number one. The second thing is most owners are not using the proper definition of normal wear and tear. So for paint, so let me explain. Paint’s usually the biggest charge on a move out, probably next to cleaning. And so what a lot of owners I see do is they go into any nail hole, any blemish, these nail holes, those are all charges. And sometimes we’ll even ask the tenants to like, backle them and they make some mess. But in California, the definition of normal wear and tear for paint is a reasonable amount of small nail holes and minor nicks and scratches. So what we do and what we recommend you do is when you go to a move out, look at the wall. So like for instance, this wall is a really good example. We have a few small nail holes and we have maybe like a mark here, maybe like, I don’t know what was here, but this could have been like a couch at your rental property. And then a couple just little minor marks, right? Little minor marks. So this wall by definition in California would be normal wearing tear. So you would not charge the tenant anything for this wall. Now assuming they lived there at least a year, I should caveat that. I think we’ve got like three months, there’s really no normal wear and tear in the short period of time. But we’re talking about a year long tendency. So that’s the easy quick definition of normal wear and tear for paint, a reasonable amount of small nail holes and minor nicks and scratches. Now that’s when the debate can begin. Well, what’s reasonable is 10 nail holes reasonable is 15. You’ve got to use your best judgment. But that gives you a good guideline to go off of. And number three, you should be using useful life whenever you have to deduct anything from a tenant security deposit. Well, I shouldn’t say anything. I should say most, probably 80-90% of things. So let me give you an example. Let’s say this wall had a big, you know, let’s say they anchored a TV here and had big, big bolts, big holes. So that would be above normal wear and tear. They would need to fix that. So what we do and what we recommend and what the California Department of Consumer Affairs recommends is that you charge based on useful life. So they actually recommend a two year to three year useful life depending on like the paint and whatnot. So we use three years. So what that means is that after three years you don’t charge the tenant anything regarding painting because you assume you have to paint anyway. Now if they do major damage to the drywall, you can charge for repairing the drywall. But you don’t charge for painting because you assume that you have to repaint after three years. So what we do at good life, what we recommend you do is if they live there over one year between one year and two years, you charge them two thirds. So what that means is let’s say it costs $100 to paint this wall. Just random number. You would charge them basically $66 and $66 about two thirds, right? So what it costs. If they live there two to three years, you charge them one third. And so it’s kind of like a sliding scale and you can use. There’s no law saying you have to use the one third to third. But judges, if it goes to court and a tenant feels you unfairly took their deposit, they’re going to take you to court, small claims court, big waste of time, big waste of money. And you don’t have to defend yourself. So it’s good to just have written policies and standard policies that you use that says, you know, hey, you lived here a year. I’m going to assume one third is kind of normal. And I’m just going to have to paint in three years anyway, so I’m going to charge a two thirds. So that’s how that goes. Now one other quick nugget I want to give you is regarding carpet. So carpet cleaning, we often get asked, can I charge a 10 for carpet cleaning? And the answer is, if it’s in your lease. So if it’s not in your lease, you should not charge them for the cleaning because as long as I leave it vacuum clean, that’s normal wear and tear as long as they didn’t do any major stains. But if you put it in the lease and they agree to it prior that, hey, carpet’s been cleaned before I moved in. And so I agree to clean it when I move out. Then you’ll be good to go. So we’ve had multiple owners. I think one owner comes to my Tim who actually had been pulled into small claims court based on security deposit and he actually lost and it actually goes on your credit if you lose a small claims case. It’s a big pain in the butt. It’s not worth it. And so sometimes we use the approach and we recommend owners, you know, it’s better to, you know, it’s not always worth it to be right. So sometimes you got to do some negotiation even if you feel you charged fairly, but if you employ these three things that we’re talking about here, you’re going to greatly reduce your chance of getting pulled into a small claims issue. And we all want to do things right by the deposit. We want to make sure we put out into the world a good service and treat people fairly. And so using those tactics will help make sure everyone’s treated as fairly as possible. And that you can be as profitable as possible with as, but also operating within the law. So again, to recap number one, over $125 you need an invoice. Number two is what is a useful life. Number two is normal wear and tear. And the definition of normal wear and tear for paintings. We talked about that. And number three is you should always be using useful life. Same thing with carpets and useful life. Like they want to generally see judges want to see a seven year, a five to seven year shelf life on carpet meaning if it was a five year old carpet and you got half of the life and then you had to replace it, you would only charge the tenant for half of the replacement cost. I know it’s not everyone might agree with this, but this is just the landlord tenant environment in San Diego in California. So if you don’t like it, maybe don’t do business here, but that’s like the rules of the game. So that’s what I’m here. Don’t shoot the messenger if you don’t agree with that. So I want to give you a quick plug, give a quick plug for our San Diego landlord newsletter. If you’re getting any valuable information from this and you’re interested in staying up to date on legal topics and new changes of a lot of different things coming down the pike in California with Prop 10 and a lot of different, you know, changes to our environment. If you want to stay up to date on that, we’re going to put a link to our San Diego landlord newsletter down below this video. So please visit that and put your email in and we send one email a month. So we’re not going to spam you or anything, but we’ll help you stay relevant on what’s kind of going on in the San Diego market with rentals. And again, if you’ve enjoyed this video, please give us your comments. We love your comments. We really appreciate them and all your feedback and your engagement. So thank you so much for watching and make it a great day.