Navigating the intricacies of security deposits can be perplexing for landlords, especially when it comes to what charges may be applied to vacating tenants. This guide addresses some of the most frequently asked questions about security deposits.
If you’ve ever rented an apartment or house, you likely had to provide a security deposit. This deposit is meant to cover any significant damages that may arise during the tenancy, ranging from chipped paint to carpet cleaning.
However, many property owners are unsure of what exactly they can charge for. The phrase “normal wear and tear” often comes up in these discussions. Understanding its definition is crucial, as it impacts both the property owner and the tenants.
At Andren Homes, we receive inquiries about security deposits every week. We recognize that the process can be complicated, especially when the laws are unfamiliar. Fortunately, we’re here to clarify everything you need to know about security deposits.
Table of Contents
What is a security deposit?
How do security deposits function?
What amount should a security deposit be?
What can I use the security deposit for?
What qualifies as normal wear and tear?
What does useful life mean?
How do I notify the tenant of any charges?
What if repairs can’t be completed within 21 days?
Is a pet deposit permissible?
California laws regarding security deposits
What is a security deposit?
Definition of Security Deposit
A security deposit is an initial payment made by a tenant to a landlord. Its primary aim is to cover any excessive damages that may occur during the tenancy, beyond what is considered normal wear and tear.
It’s important to note that pet deposits and security deposits serve different purposes. For details on pet deposits, refer to our section on that topic below.
How do security deposits function?
The security deposit serves as a safeguard for landlords. It ensures that any repairs needed due to damages beyond normal wear and tear can be handled without the landlord incurring the costs. At the end of a lease, this deposit is returned to the tenant, minus any deductions for repairs or unpaid rent.
What amount should a security deposit be?
In California, the amount landlords can require as a security deposit varies based on the property's nature and the tenant’s status.
Unfurnished Properties: For properties without furnishings, landlords cannot charge more than two times the monthly rent.
Furnished Properties: If the property is furnished, the deposit may be up to three times the monthly rent. This higher amount accounts for potential damage to the furnishings.
Active Duty Military: Under SB 644, there are special provisions for tenants on active military duty. California law offers protections to these tenants. If a service member provides deployment orders or permanent change of station orders, the landlord may only charge a maximum of one month’s rent for an unfurnished property or two months’ rent for a furnished one.
Starting July 2024, Governor Newsom's recently signed AB 12 will further limit how much landlords can charge for a security deposit to one month’s rent.
Average Security Deposit
Typically, many landlords in the U.S. charge an amount equivalent to one month’s rent as a security deposit. However, this practice is not a federal mandate. From July 2024, California law will restrict the maximum charge for a security deposit to one month’s rent.
What can I use the security deposit for?
In California, landlords are authorized to use the security deposit for specific purposes, ensuring that tenant rights are protected while allowing property owners to maintain the integrity of their properties.
Unpaid Rent: Landlords can apply the deposit to cover any unpaid rent once the lease ends, ensuring they aren’t financially disadvantaged.
Cleaning Fees: If the property requires cleaning beyond what is considered normal wear and tear, the deposit may be used to cover these costs. The objective is to restore the property to its pre-move-in condition.
Repairs: Damages that exceed regular wear and tear can be repaired using the deposit. This excludes issues arising from normal living conditions but includes negligent or abusive living habits.
Replacing Personal Property: If items provided as part of the rental agreement, such as appliances or furniture, are damaged or lost, the deposit can be used for replacements.
Understanding Normal Wear and Tear
The security deposit, provided by tenants at the beginning of a lease, acts as protection for landlords. Tenants understand that the property will be returned in a condition similar to when it was first rented, taking into account normal wear and tear. If any damage surpasses typical wear and tear, the security deposit is intended to cover repair costs.
What is considered normal wear and tear in a rental?
Normal wear and tear refers to the natural deterioration of a property over time due to regular use. Examples include faded paint from sun exposure, worn carpet from foot traffic, or loosening door handles. The key to distinguishing wear and tear from actual damage lies in the cause.
If something deteriorates due to time and typical use, it’s considered wear and tear. However, if it results from negligence or misuse, such as a hole in the wall or a broken window, it’s classified as damage. This can encompass hardwood floor scratches, wall drawings, chipped tile or glass, and carpet stains. Costs for such damages may be deducted from the security deposit. If expenses exceed the deposit amount, the tenant may be billed for the additional costs.
The security deposit may also be applied to unpaid rent and/or cleaning fees, which are used to restore the property to its pre-move-in condition.
However, interpretations of what constitutes wear and tear may change over time.
Example - What is normal wear and tear after 5 years?
After five years in a property, noticeable changes may occur. For instance, paint may show significant fading, doors may begin to sag slightly, and carpets could display distinct wear patterns. All of these can be considered normal wear and tear. Another common occurrence, particularly in areas with high humidity or fluctuating temperatures, is paint peeling. Such deterioration, especially after five years, is typically seen as normal wear.
Example - What is normal wear and tear after 10 years?
A decade of occupancy undoubtedly leaves its mark. By ten years, the signs of wear and tear are considerably more pronounced. Carpets may need replacing, wooden floor finishes could reveal noticeable wear, and fixtures like faucets may seem outdated. Some types of wood may also darken over this period, especially with ongoing sun exposure. Such color changes are entirely consistent with normal wear and tear over ten years.
What does useful life mean?
Useful life refers to the timeframe in which a part of the home, like carpet or paint, needs to be replaced. Even the best paint jobs have a limited lifespan, affecting how much to charge tenants.
The expected lifespan for paint is usually around three years, depending on the property. At Andren Homes, we charge tenants who have been in the property for one year ⅔ of the cost to repaint. For example, if it costs $100 to repaint one wall, the tenant would be charged $66.
While there’s no specific law regarding these calculations, a three-year lifespan for paint is generally accepted in the industry. Some apartment complexes may apply a two-year lifespan, meaning a tenant who stays for one year would pay $50 for the $100 wall. For further information on the lifespan of other property features, check out this Fit Small Business article on normal wear and tear for rental properties.
How do I notify the tenant of any charges?
After assessing the property and completing repairs, you will need to send an invoice to the former tenant. If charges exceed $125, an itemized receipt must be provided, including invoices from any contractors used. This will detail all charges and their justification.
It’s advisable to take photos of the apartment before the tenant moves in and after they leave. This way, if the tenant questions any damages, you have documentation to support your claims.
Within 21 days of the move-out date, you need to return the remaining (or full) deposit along with the invoice and an explanation of charges. Failing to do this could result in having to return the funds or facing small claims court.
What if repairs can’t be completed within 21 days?
If necessary repairs cannot be finalized within 21 days, you can provide the tenant with a good faith estimate. This estimate should give a rough breakdown of expected repairs and costs, along with the anticipated refund amount.
Once the repairs are completed, you must notify the tenant within 14 days and adjust the return amount if necessary.
Is a pet deposit permissible?
A pet deposit may be charged to cover potential damages associated with having a pet in the home. It’s advisable to include this in the total deposit you are charging, rather than listing it as a separate pet deposit. This is because a designated pet deposit can only be used for pet-related damage. For instance, if your security deposit is $1,000 and the tenant informs you they have a pet, you would add the additional deposit to the original amount. Pet deposits typically range from $200 to $500.
A combination of a pet deposit and a security deposit cannot exceed the limits outlined earlier. For example, if you intend to charge an additional $500 for a pet, this cannot exceed twice the rent for unfurnished units or three times the rent for furnished ones.
Also, keep in mind that pets and service animals are distinct categories. You cannot charge rent for service animals. For more information on service animal laws, check out our blog.
California laws regarding security deposits
California Governor Gavin Newsom has signed Assembly Bill 12, which sets a cap on security deposits at one month’s rent. This new legislation, effective July 1, 2024, aims to enhance housing affordability.
Previously, landlords could demand up to three months’ rent for security deposits, leading to high upfront costs for renters, particularly in high-rent cities like Los Angeles and San Francisco.
Normal Wear and Tear in California
In California, “normal wear and tear” refers to the natural physical deterioration that occurs over time with the regular use of a rental property, even among tenants who are diligent and responsible. It is expected that a rental property will not remain in the same condition after a tenant moves out compared to when they moved in, due to the typical effects of aging and daily living.
Examples of normal wear and tear in California include:
Fading curtains, paint, or wallpaper from sun exposure.
Minor scuffs or marks on walls.
Lightly worn or slightly dirty carpets (not deep stains or heavy soiling).
Small nail holes or minor dents in walls from hanging pictures.
Doors sticking due to humidity.
Faded paint or wallpaper.
Worn-out gaskets on refrigerator doors.
Loose hinges or handles on doors or cabinets.
Conversely, damage caused by negligence, misuse, or abuse by the tenant or their guests does not fall under “normal wear and tear.” Examples include:
Large or excessive holes in walls.
Stains or odors in carpets due to pets or spills.
Broken windows or damaged blinds.
Missing or damaged appliances included with the rental.
Distinguishing between “normal wear and tear” and damage is crucial in California regarding security deposits. Landlords cannot withhold any portion of a security deposit for normal wear and tear repairs. However, they may deduct amounts to address actual damages caused by the tenant, unpaid rent, or cleaning costs needed to return the unit to its original state.
Return of Security Deposit in California
California’s laws governing the collection, maintenance, and return of security deposits are found in California Civil Code Section 1950.5. This section outlines how landlords should manage security deposits. Key provisions include:
Maximum Amount: Landlords can charge up to two months’ rent for an unfurnished unit and up to three months’ rent for a furnished unit. Additionally, if the tenant has a waterbed, landlords can charge an extra half month’s rent. Note that the maximum amount for security deposits will change in July 2024.
Senate Bill 644 (SB644): Effective in 2020, this law limits security deposits for active military members to one month’s rent.
Permissible Uses of Security Deposit: Landlords can use the deposit for:
Unpaid rent.
Cleaning the rental unit to restore its condition at the start of the tenancy.
Repairing damages caused by the tenant or their guests, excluding normal wear and tear.
Restoration or replacement of property (like keys) if specified in the lease.
Returning the Deposit: Landlords have 21 days after the tenant vacates the premises to either:
Return the entire security deposit.
Send a partial refund along with an itemized statement of each deduction, including receipts for materials and labor. If certain repairs cannot be completed within the 21-day timeframe, the landlord can send an estimate of the costs and must provide receipts within 14 days of completing the repairs.
Bad Faith Retention: If a landlord retains the security deposit in bad faith, the tenant may be awarded up to twice the deposit amount.
Interest on Security Deposits: While some cities may require landlords to pay interest on security deposits, California state law does not mandate this.
Normal Wear and Tear: Landlords cannot deduct funds from the security deposit for normal wear and tear on the property.
What happens if a landlord does not return the security deposit within 21 days in California?
In California, if a landlord fails to return the security deposit or provide an itemized statement of deductions within 21 days of the tenant vacating the property, several consequences may arise.
First, the landlord may forfeit the right to retain any portion of the security deposit, meaning the tenant could be entitled to a full refund.
Additionally, if the landlord is found to have withheld the deposit in “bad faith” (i.e., with intentional non-compliance or without a legitimate reason), the tenant has the right to sue for up to double the withheld deposit amount.
Final Thoughts
As circumstances vary and laws can change, staying informed is essential. While this article addresses common inquiries, it’s advisable to consult legal counsel or review updated state statutes for any specific concerns or detailed insights. A well-informed approach benefits everyone!
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Logan Andren
Logan Andren is the founder and CEO of Andren Homes Property Management. Since launching the company, Logan and his dedicated team have simplified the rental property experience for numerous Santa Cruz homeowners. Their mission is to enhance the lives of their clients and community, focusing on providing exceptional service and fostering lasting relationships. DRE #02002055
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