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  • Writer's pictureSara Naheedy

Landlord Guidelines Regarding the Security Deposit Refund Process

The following items are what landlords sometimes do not understand about the security deposit refund process:

  1. Taking Too Long: California law states that landlords have a maximum of 21 days after the resident has vacated the property to refund the security deposit. If this time frame is exceeded, the landlord forfeits any right to retain the resident’s security deposit for any reason and may be liable to pay three times the amount of the security deposit to the resident. Don't make this costly mistake!

  2. Confusing Wear and Tear for Damage: California law distinguishes between wear and tear and damage, and it is important to note the distinction between the two. While landlords may make deductions to the security deposit for resident caused damages, they may not make any deductions to the security deposit for items of wear and tear or property improvements. Wear and tear refer to the natural deterioration of things as time progresses, whereas damage is caused by the negligence of the resident. If a landlord incorrectly charges for what could be legally defined as wear and tear, they may be responsible for paying the resident three-times the amount of the incorrect charge or deduction.

  3. Treating a Deposit as Non-Refundable: A deposit is, by legal definition, refundable. Legally, a landlord cannot have a non-refundable deposit. Rather, any funds defined as a “deposit” must be refunded to the tenant. Therefore, it is important to recognize the difference between a non-refundable fee and a deposit, as any type of fee also labeled with the word “deposit”, must be refundable.

  4. Forgetting to Check the Final Utility Bill: All final utility bills should be taken into consideration when determining how much of the resident's security deposit may be withheld. For example, in California, most utilities are billed in arrears, so the final utility bill will not be billed until after the resident has moved out. This means that the landlord may need to contact the utility company for a final billing statement and then ensure that any unpaid charges are properly charged to the resident’s security deposit.

  5. Over Charging for the Landlord's Time: The process of bringing a property back to rent ready condition after the previous residents have vacated may include items like repainting the walls, mowing the lawn, or making other small repairs. While landlords may charge for the price of the materials used to repair tenant caused damage, they may not charge exorbitant fees for their personal time involved in the process of making these repairs.

  6. Understanding the Life Expectancy of an Item: Every item in a property has a different life expectancy, and California real estate investors and landlords must take this into consideration when charging a resident for replacement of such an item. For example, most carpets have a life expectancy of five to ten years. If a carpet is five years old when a resident moves into the property, and they live at the property for another five years, the life expectancy of the carpet has been exceeded by the time the tenant moves out. Consequently, regardless of the condition of the carpet at the time of move-out, landlords may not charge for damage done to the carpet. If replacement of an item is required in which the life expectancy has not been reached, then a life expectancy formula should be used to determine the amount of deduction that should be made to the resident’s security deposit.


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