A Landlord’s (and Tenant’s) Guide to Security Deposit Rules

February 10, 2011 | | Articles | 2 Comments

Security Deposit Rules for San Diego Property ManagersMost landlords require the payment of a security deposit which can be used for unpaid rent, damage to the unit or landlord’s personal property caused by a tenant, unreturned keys or other personal property, or cleaning if the unit is left less clean that it was at the time of the initial tenancy.

California law prohibits nonrefundable security deposits.[1]

Unless the landlord uses the deposit for a legally permitted purpose, it must be returned to the tenant within 21 days of the termination of tenancy.  The total amount of deposit that can be required from a tenant is two times the monthly rent in the case of an unfurnished unit, and three times the monthly rent for a furnished unit.  If the tenant has a waterbed, the deposit can be increased by an additional 50% of the monthly rent.

A Deposit is a Deposit is a Deposit!

Security deposits, key deposits, last month’s rent, pet deposits, cleaning deposits, etc., are all just that: deposits.  Regardless of what they are called, deposits cannot exceed the limits outlined above.[2]

California law carves out an exception for the applicant screening fee which can be charged on a non-refundable basis for checking an applicant’s references, obtaining a credit report, etc.  Fees for processing a new tenant, such as fees for forms, listing, setting up the account in the computer, etc., are considered deposits according to 1950.5(b) and are refundable.

Hold It For Me!

A holding deposit, as the name implies, is a deposit that a prospective tenant gives the landlord in exchange for an agreement not to rent the unit to another person for an agreed amount of time.  This is often used when a tenant and landlord come to terms for the leasing or renting of a unit but the tenant cannot move in immediately. Once the tenant moves in, the deposit is typically applied to the first month’s rent.

The holding deposit does not give the tenant the right to move into the unit.  He or she must first pay the first month’s rent and any other deposits due within the holding period.  If the tenant decides not to rent the unit, the landlord may be entitled to keep some or all of the holding deposit, depending on the costs, such as lost rent and additional advertising, incurred as a result of the tenant’s rescission.

On the Other Hand….

If the landlord accepts a holding deposit but then rejects the tenant, the entire holding deposit must be returned.

A landlord that accepts a holding deposit on a ready, willing, and able tenant, but rents to someone else during the holding period, is acting in bad faith and should refund the deposit in full.  In this case, the landlord may be liable to the tenant for his or her costs resulting from the loss of the rental unit.

A detailed receipt that outlines all of the terms and conditions of the deposit should be signed by both parties to avoid misunderstandings.  A complete discussion on refunds of security deposits can be found at the Department of Consumer Affairs  website at this link.

[1] Civil Code Section 1950.5(m)

[2] Civil Code Section 1950.5(b) Downwitemnoyris

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Comments (2)

silvia tello » 02. May, 2011


How far in advance of moving in date can a landlord request a security deposit? if the property is not available by the contract date, can I request a refund & move some where else? thank you

admin-ippm » 03. May, 2011

Sometimes, the tenant and landlord will agree on a tenancy but the tenant cannot move in right away. The landlord may ask for a holding deposit which is a deposit to hold the unit for a specific period of time. The code doesn’t appear to regulate the length of time that holding period can be. The landlord agrees to take the unit off the market for that period of time. If the tenant fails to move in as agreed, the landlord may keep some or all of the deposit, depending on the costs he incurs as a result of the tenant’s change of heart. Advertising and lost rent are examples of these costs. The landlord could be entitled to recover these costs even if the reason the tenant can’t move in is not their fault. If the landlord fails to rent to the tenant on the specified date, the landlord should, at the very least, return the entire deposit. Always have a written agreement regarding the disposition of the holding deposit under each likely scenario. This link will get you to a California Department of Consumer Affairs publication that addresses this issue.