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Know the rules about security deposits

On Behalf of | Jun 3, 2024 | Landlord-Tenant Law |

A rental agreement requires a certain level of trust between the landlord and the tenant. In California, a security deposit is designed to protect both the landlord and tenant in various ways. Still, when a tenant leaves the property or issues arise, disputes can crop up over security deposits.

To address them, it is imperative to understand how security deposits work. In some instances, disagreements can be negotiated. In others, it is necessary to go through the legal system to settle the dispute.

Know the purpose of and the rules surrounding security deposits

Under a lease, the tenant has specific obligations. The goal is to make sure the tenant’s financial agreement to rent the property is met. In general, it is cash paid to the landlord when the rental agreement is signed. However, there are other methods that can be used such as a letter of credit.

It can be rent that is paid beforehand; a security deposit that the tenant could forfeit if they do not fulfill the obligations of the lease; a security deposit that cannot be forfeited and will be refunded when the lease ends unless the tenant still owes anything to the landlord; or a non-refundable bonus paid when the lease is executed.

Landlords can ask the tenant to pay two months’ rent in advance for a property that is unfurnished and three months for one that is furnished. The parties can reach their own agreements independent of the law.

Tenants should know the limitations for deductions from a security deposit. A rental property needs to be cleaned when a tenant moves out and before new prospective tenants can assess the property and move in. Cleaning it so it is in the same condition it was before the tenant moved in is part of the security deposit. If there is damage, that too can warrant part of the security deposit being retained. That does not apply to normal wear and tear that comes with age. The restoration and replacement of items that were part of the rental agreement are also part of the security deposit.

Security deposit disputes should be handled through legal means

Given the significant demand for rentals in the Bay Area, disagreements are common. Regarding security deposits, what landlords can do, tenant obligations and what can happen if the sides cannot find common ground, it is useful to have professional assistance to settle matters either through negotiation or by going to court. Having guidance in landlord-tenant matters is key to reach a favorable result regardless of the perspective.