Peeling The Onion Deeper On Security Deposits

By DANIEL BORNSTEIN, ESQ.

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We wanted to pick up where we left off on our last post on security deposits. If you find yourself in Small Claims Court, there’s a good chance it will be because of a security deposit dispute.

To recap, under Civil Code Section 1950.5 a landlord may generally collect up to the equivalent of two months rent for deposits on unfurnished apartments and up to three months rent for deposits on furnished apartments.

There’s more to moving your tenants in than signing the lease, taking their money and giving them the key. Completing a thorough property inspection before residents move in or out of your property will remove ambiguity on the unit’s “before and after” condition, hold the resident accountable for damages, and reduce the likelihood for security deposit disputes. As the saying goes, appearances can be deceiving, so look carefully to document every nook and cranny.

A recurring theme of our practice, time and time again, is landlords using stale or improper documentation. We have put together a handy worksheet you can use during the move-in and move-out inspections - get your copy here.

Nearing the conclusion of a tenancy, there are procedures that the landlord should follow to the letter. In the eventuality of court action, the failure to follow these procedures does not bode well for the rental property owner. Written notice must be given to the tenant informing them of the right to a pre-move out inspection to occur no earlier than two weeks before the move-out date. This inspection should occur only after 48 hours advanced written notice, unless the tenant waives this requirement. During the inspection, the tenant has the right to be present, and must be so advised. If the tenant exercises this right and wishes to attend the inspection, it should occur at a mutually convenient time.

When problems are discovered, an itemized statement specifying the proposed deductions for repairs and/or cleaning must be furnished to the tenant, along with a copy of the sections of California’s security deposit statute that list lawful uses of tenants’ security deposits, namely Civil Code §1950.5(d) and (b)(1)-(4).

After the pre-move out inspection, the tenant may remedy any identified deficiencies that would otherwise result in deductions in the security deposit.

In parting thoughts, the landlord may make security deductions for items that fall outside of the itemized statement if the damages occurred after the inspection, or if the damages were concealed by the tenant’s possessions.

At this point, you may be asking yourself this: When can deductions be made, and what is “normal wear and tear”? These are frequently asked questions posed to our office and we’ll take this on in our next post.  

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As the founding attorney of Bornstein Law, Broker of Record for Bay Property Group and expert witness, Daniel Bornstein is a foremost and well-respected expert in landlord-tenant disputes and other property management issues with over 23 years of experience in handling real estate and civil litigation related disputes in and throughout the Bay Area. More than a litigator, Daniel manages rental properties, assists in completing real estate transactions and is well known for his educational seminars. He is always eager to answer questions and engage with Bay Area landlords, property owners and real estate professionals. Email him today.