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BASIC SECURITY DEPOSIT QUESTIONS

What is the maximum amount a landlord can hold as a security deposit?
Is the tenant entitled to interest on the security deposit?
Can the tenant apply the security deposit to the rent for the last month?
What may the landlord deduct from the security deposit?
Does the tenant have a right to notice of the “damages” charged?
When must the landlord return the security deposit?

MAXIMUM AMOUNT OF SECURITY DEPOSIT

It does not matter what the deposit is called, any money the landlord receives that is not rent is generally considered to be part of the security deposit. The maximum amount that can be held is the total of TWO MONTHS RENT. If monthly rent is $1,000, then the maximum the landlord can require is $2,000 – whether they call it “cleaning deposit” or “key deposit” or “last month’s rent” or “security” or anything else. See California Civil Code section 1950.5.

There is not such thing as a “nonrefundable” security deposit.

INTEREST ON SECURITY DEPOSITS

Generally, there is no requirement that the landlord pay interest on security deposits. However, local ordinances (San Francisco’s is an example), may require interest to be paid. Chapter 49 of San Francisco’s Administrative Code requires that landlords pay interest each year on residential security deposits [the law is further complicated by the landlord’s right to deduct the San Francisco Rent Board Fee from the interest on the tenant’s security deposit. For more detailed information, contact the San Francisco Rent Board].

APPLYING SECURITY DEPOSIT TO RENT AT END OF TENANCY

Tenants often fail to pay rent in the last month or two of their tenancy, and use the security deposit to pay the “last month’s rent.” However, if the landlord did not agree to accept the final rent payment(s) from the security deposit, then the tenant is technically violating the terms of the lease by failing to pay rent.

WHAT “DAMAGES” CAN THE LANDLORD TAKE FROM THE SECURITY DEPOSIT

The landlord can deduct unpaid rent and damage caused to the unit that is not “ordinary wear and tear.” The general rule is that the unit must be left in the same condition it was in when the tenant moved in, except the tenant is not responsible for ordinary wear such as aging paint, normal carpet wear, etc.

Landlords and tenants should take detailed photographs of the unit at the beginning of the tenancy to help establish the condition of the unit at move-in.

NOTICE AND “WALK-THROUGH” INSPECTION RIGHT

Within two week prior to move-out, the landlord must notify the tenant of the tenant’s right to a walk-through of the unit. The tenant may request that the landlord inspect the premises for damage. The tenant has the right to be present at the time of the inspection.

ITEMIZED COSTS & RETURN OF UNUSED DEPOSIT TO TENANT WITHIN 21 DAYS

The landlord must return any unused security deposit to the tenant within 21 days, along with receipts or a detailed explanation of amounts deducted (Civil Code ยง 1950.5(f)).