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What Every California Landlord Must Know About Security Deposits

A security deposit is money paid by a tenant to the landlord, which is subsequently held by the landlord for the purposes of providing compensation for a tenant's failure to pay rent; repairing damages to the premises, excluding ordinary wear and tear, caused by the tenant or tenant's guest or licensee; cleaning of the rented premises upon the tenancy's termination; and remedying further defaults of the tenant in complying with the terms of the rental agreement. The deposit may, if applicable, be used for the restoration and/or return of personal property or appurtenances, provided that the rental agreement authorizes its use for that purpose.

One question that frequently arises is whether a security deposit can be used for cleaning carpets or painting. A landlord cannot deduct for painting, or steam cleaning, or replacing the carpets, unless there was serious damage. The landlord is allowed to deduct the cost of cleaning if necessary, but only if necessary to put the rental unit back to the same level of cleanliness it was in at the time the property was leased.

Security deposits on apartment leases are governed by California Civil Code Section 1950.5, which limits a security deposit to two months' rent for unfurnished apartments and three months' rent for furnished apartments. A lease may not provide for a "nonrefundable" security deposit.

The law requires landlords to return the deposit within 21 days of the tenant ending the lease. State law does not require payment of interest on security deposits. However, some local governments, such as the City of San Francisco, require certain landlords to pay their tenants yearly interest on security deposits and impose some other, additional obligations. In Berkeley, landlords of units that are covered (non-exempt) by the Berkeley's Rent Registration Ordinance must return interest accrued through October 31st of each year, either as a cash payment or rent rebate. More information about Berkeley's rules regarding security deposits can be found here.

Some other local laws in California with respect to security deposits include:
  • Santa Monica: Under Chapter 14 of Santa Monica's Rent Control Law, a landlord may not increase the amount of the tenant's security deposit once it has been established.

  • Santa Cruz: Under Chapter 21.02 of the Santa Cruz Municipal Law, a landlord must remit interest on the security deposit to the tenant no later than January 1 for the preceding year. This can take the form of a payment or a rent credit.

  • West Hollywood: The City of West Hollywood's Rent Stabilization Ordinance requires that tenants be paid interest on their security deposits by January 31 of each year in an amount determined by the City based on prevailing interest rates.

California Landlord Tenant Law