As a landlord attorney in Orange County, I frequently advise clients on navigating California’s tenant security deposit laws. Here are some key points to remember:
- Compliance is Essential: Strict adherence to California Civil Code Section 1950.5 is crucial to avoid potential lawsuits and penalties. Security deposits must be handled correctly from collection to return.
- Security Deposits are Refundable: There is no such thing as a “non-refundable” security deposit. The security deposit belongs to the tenant, not the landlord, however the landlord can hold the deposit to cover allowable expenses once the tenant moves out. If the landlord sells, the deposit needs to be transferred to the new owner.
- Deposit Limits are Changing: Be aware of the upcoming change in deposit limits (effective July 1st, 2024). Currently, the maximum allowable deposit is two months’ rent or up to three months for fully furnished units. This will transition to just one month’s rent starting July 1, 2024 (with exceptions for some mom and pop landlords who own no more than four rentals).
- Detailed Records Protect You: Maintain thorough documentation of the property’s condition at move-in and move-out, and any improvements/repairs made to the unit during the tenancy. This includes move-in photos and a detailed walk-through checklist signed by both parties.
- Pre-Move-Out Inspections Must Be offered: When a tenant provides notice of intent to vacate, or when the landlord issues a notice to vacate, the owner must inform tenants of their right to an initial inspection. If the tenant asks for an inspection it must happen within two weeks before the intended move-out, the tenant has the right to be there during the inspection, and the owner must identify all damages the landlord intends to deduct from the deposit by way of an itemized statement.
- Detailed Deposit Returns are Mandatory: Within 21 days of move-out, the landlord must return the security deposit (minus allowable deductions) along with an itemized list of any withheld amounts exceeding $125. Include receipts or good faith estimates for repairs completed/needed. This detailed accounting within 21 days of move-out is mandatory even if no deposit is being returned.
- Allowable deductions: Past-due rent; the cost of repairing damages caused by tenants (not including ordinary wear and tear); and the cost of cleaning the property.
- Penalties for failure to comply: If the landlord fails to strictly comply with CCC §1950.5, the landlord could be liable to the tenant for two times the security deposit, and up to three times the security deposit if the court finds the landlord acted in bad faith.
- Local Ordinances May Apply: Landlords in Orange County should check with their local municipality for any additional regulations concerning security deposits.
- Military Tenant Protections Exist: Be aware of specific protections afforded to service members, such as potentially lower deposit requirements and additional eviction protections.
- Legal Representation is Available: For complex situations or potential disputes, consulting a landlord attorney in Orange County is highly recommended.
Following these best practices and seeking legal advice when necessary will help Orange County landlords avoid costly security deposit disputes and ensure a smooth and legal rental process.