Nick Roscha is with us today, and he is an attorney who specializes in real estate law and business matters. We asked him to talk to us about security deposits. We’re discussing the best way to handle them in the beginning of a lease and when people are moving out.

Security Deposit Limits

This issue crops up at the inception and termination of the lease. Owners need to be aware of the maximum they can charge for a security deposit. You can charge no more than the equivalent of two months of rent for an unfurnished property. If the property is furnished, you can charge three times the amount of rent. This doesn’t include a pet deposit, so if someone has an animal, you can charge more.

Returning the Security Deposit: Timing

On the tail end, landlords also run into problems with the treatment of the security deposit. Whether you terminate the lease or a tenant vacates, you have 21 days after you get possession of the property to return the full deposit or an allocation of what you have deducted from that deposit.

Returning the Security Deposit: Deductions

You also need to know what you can deduct for. Civil Code Section 1950.5 details exactly what you can deduct for and what you can’t. You can deduct for outstanding rent, repairs to the property, and damages the tenant left behind. You cannot take any other money out of the deposit. If the tenant was chronically late in paying rent and there are late charges that accumulated, you might be able to collect that as unpaid rent. Try not to withhold money for anything not related to rent or damage, however.

If you don’t give back the deposit within 21 days, the tenant has a right to the entire deposit. If you don’t provide it, they can sue you for triple damages.

Pre-Move Out Walk Through

In California, you have to offer the tenant a pre-move out walk through 10 days or two weeks before the end of the lease. They don’t have to accept it, but you need to offer it. If you don’t offer it, they can get the entire security deposit back. When you do the inspection with the tenant, you can only deduct what you informed the tenant about.