In California, a security deposit for an unfurnished, residential rental unit cannot exceed 2 times the monthly rent. (Note that if a unit is furnished, the deposit can be increased to 3 times the rent). All deposit money must be refundable. California law does not allow a landlord to charge a non-refundable deposit. Even if the landlord calls it a nonrefundable “key deposit” or a “cleaning deposit” and includes the provision in the lease, it is still refundable. Because non-refundable deposits are illegal in California, such clauses are not valid and will not be upheld by a Court.
Once a tenant vacates the property, the landlord can deduct the cost of repairing a property from the deposit. However, if a tenant leaves the property in substantially the same condition it was in when it was rented (less “normal wear and tear”), the deposit must be returned. (See a separate discussion of “Normal Wear and Tear”).
Within 2 weeks of the tenant’s move out date, the tenant must be advised, in writing, that they have a right to a walk-through with the landlord. The landlord must then give the tenant the opportunity to repair the items pointed out in the walk-through.
The landlord then has 21 days to return the deposit to the tenant. The security deposit can be used for unpaid rent as well as “necessary and reasonable” repairs. If some or all of the deposit has been used to make repairs, the landlord must include an itemization of the repairs done and the costs along with receipts or documentation of the charges.
These Security Deposit rules should be carefully followed because consequences to landlords can be very expensive. Tenants can sue landlords in Small Claims Court over security deposit disputes. The Court can award a tenant 2x the deposit amount in damages. In some cases, if the tenant can prove that the landlord acted in bad faith, additional punitive damages can even be awarded against the landlord.