As you know, security deposit laws changed in California in 2024. As of July 1, 2024, there’s a new limit to what most landlords and rental property owners can collect. That limit is the equivalent of one month’s rent. There are exceptions, but very few property owners we know are charging more than that one-month equivalency.
Today, however, we aren’t talking about how to collect a security deposit. Instead, we’re taking a closer look at how to return or refund a security deposit in Southern California.
Why?
Because this is where things are most likely to go wrong.
We have helped a lot of rental property owners avoid security deposit disputes and conflicts, and here are the rules and the best practices that you’ll want to understand in order to end a tenancy with a good relationship and a solid reputation intact.
California law mandates that landlords must return a tenant's security deposit within 21 days after the tenant moves out. During this period, landlords must either:
We’ll talk next about what those allowable deductions include and exclude, but for the purposes of timing, it’s important to understand that you have those 21 days. Failing to meet this 21-day deadline opens the door to consequences that can escalate quickly.
Returning a security deposit late can lead to significant legal and financial risks for
California landlords:
| Full Refund Requirement | Penalty Damages | Legal Fees |
|---|---|---|
| If the deposit isn’t returned within 21 days, you're liable to return the full deposit to the tenant, regardless of deductions. | California Civil Code Section 1950.5 allows tenants to sue for up to three times the security deposit amount in penalty damages if the landlord acts in bad faith in addition to the original deposit amount. | You may also be responsible for covering the tenant’s court costs and attorney fees, further increasing the financial impact. |
Beyond the legal penalties, returning a security deposit late can harm your reputation as a landlord, affecting your ability to attract and retain tenants in the future.
A security deposit is collected from a tenant before they move into your rental property. It’s meant to cover specific costs incurred during or after the tenancy. However, California law limits the usage of this deposit. It’s important for landlords to adhere to these restrictions to avoid legal disputes.
Here’s what a landlord can legally use a security deposit for in California:
Let’s get a little more detail around these reasons:
| Unpaid Rent | Cleaning Costs |
| One of the most common reasons a landlord may deduct from a security deposit is for unpaid rent. If a tenant skips their final payment or leaves the property with outstanding rent due, you can legally use their deposit to cover the debt. That said, it’s important to provide an itemized explanation to the tenant. Remember, as a best practice to always document payment schedules and agreements to avoid potential disputes over unpaid rent. | Under California law, landlords can use the security deposit to pay for cleaning the property but only to return it to its original move-in condition. For example, if a tenant leaves excessive dirt or refused to clean, the cleaning costs can be deducted. You can’t deduct for routine cleaning tasks that you would do before a new tenant moved in. Documentation is important. Take photos of the property before the tenant moves in and after they vacate to provide evidence of the property’s condition. |
| Damages Beyond Normal Wear and Tear | Replacing Missing Items |
| Another valid reason to keep a portion of the security deposit is to repair damage caused by the tenant. However, you must differentiate between normal wear and tear (like faded paint, loose door handles) and tenant-caused damage (like broken windows, large holes in walls). Common damages landlords may deduct for stained carpets that cannot be cleaned, broken light fixtures or appliances, and large holes in the walls caused by nails or fixtures. Ensure you provide an estimate or invoice for repair costs along with your deductions to comply with California laws. | If the tenant removes or misplaces items like furniture, appliances, or keys provided at move-in, you are allowed to deduct the cost of replacement from the security deposit. For example, missing remote controls for ceiling fans or lost sets of keys that require rekeying the locks would allow for deductions. Again, thorough documentation of the original inventory and signed agreements is essential to reinforce these claims. |
A lot of owners struggle with understanding the difference between wear and tear and damage. We have given a few examples above, but we know it can be complicated to make a quick decision during the course of a move-out inspection.
At the very basic definition, normal wear and tear occurs when items age or deteriorate. This will happen to paint and carpet in a home no matter who is living there. Landlords in California are responsible for general wear and tear items; you’ll have to pay to get the property ready for a new tenant, and that will usually include things like painting and carpet cleaning. You cannot charge a tenant’s security deposit for those tiny holes in the walls from where pictures are hung. You cannot charge for scuff marks on the floors and the walls from furniture.
Damage, by definition, is anything that’s a result of negligence, abuse, or carelessness. Something like a broken dishwasher door could be accidental, but it’s still damaged. These are things that tenants are required to pay for, and the cost is deducted from the security deposit at the end of the lease term.
This chart may help. It shows a general estimate of how long you can expect things to last and what they look like when they’re damaged or simply the outcome of normal deterioration.
| Material | Average Useful Life | Normal Wear and Tear | Damages |
|---|---|---|---|
| Carpet | 5 years | Gently worn without holes/stains | Pet stains, holes |
| Tile Floor | 25 years | Dirty grout | Broken or chipped |
| Windows | 20 years | Lightly scratched glass | Chipped, burnt stains |
| Paint | 3 years | Faded, minor scuffing | Holes, re-paints |
A move-in inspection and checklist are critical in order to compare the condition of the property to its move-out condition. When you work with a local property management company, you can expect that a thorough survey will be conducted to effectively protect your property and distinguish between wear and tear and damage at the end of the tenancy.
Maybe you think it’s just easier to disclose upfront that you won’t be returning the security deposit; and that it’s non-refundable.
That’s illegal in California. You cannot have a nonrefundable deposit.
To recognize the difference, let’s talk about pets. If you’re going to allow a tenant to move into your property with a dog, you can charge a pet fee or a pet deposit. The deposit is going to be refundable at the end of the tenancy. If there is no pet damage, the tenant gets the pet fee back. It’s a great way to incentivize good behavior and careful property protection. If you collect a pet fee instead, that’s non-refundable. The tenant is going to never see that money again. It’s great for you because it means you get to keep the entire sum, regardless of whether there’s pet damage or not. But there’s really no incentive for that tenant to avoid pet damage. They’re not getting that money back anyway.
You can withhold money from the deposit to cover any unpaid rent and utility bills that the tenant did not pay before moving out. This can be tricky, depending on how you have your utility accounts and payments structured for a rental. The final bill may not arrive until after the tenant has left. If they have not settled up with the utility company or with you, it’s important to determine what you’ll withhold from the deposit to cover those unpaid charges.
While landlords may charge 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.
To avoid conflicts and ensure compliance with Security deposit laws, implement the following best practices:
California law requires landlords to offer their tenants a pre-move out inspection.
This is important.
A pre-move out inspection is a walkthrough of the rental property conducted before the tenant officially moves out.
California law says that landlords are required to offer tenants the option of this inspection no earlier than two weeks before their move-out date. The purpose is to identify potential damages, provide the tenant with an opportunity to address them and facilitate a smoother transition for both parties.
This is an excellent way to avoid security deposit disputes and mistakes.
During the inspection, landlords can document any issues, compare the current state of the property to the condition noted at move-in, and give tenants a written itemized list of potential deductions from their security deposit.
| Legal Compliance | Protect Your Property |
| California law mandates that landlords provide tenants with the option for a pre-move out inspection. Failing to comply could result in legal disputes or fines. Offering this inspection ensures you’re meeting your legal obligations while establishing transparency. | Conducting a pre-move out inspection allows you to assess the condition of your property and address potential issues early on. By identifying damage before the tenant moves out, you can prevent surprises during the final walkthrough. For example, if you notice scuff marks on walls or damage to appliances, you can have a clear conversation with the tenant about repairs. This process safeguards your investment and reduces the time your property sits vacant after its tenancy ends. |
| Improve Tenant Relations | Reduces Security Deposit Disputes |
| Showing professionalism and fairness is critical to building long-term relationships with tenants. Pre-move out inspections are an excellent way to demonstrate your commitment to handling their security deposit fairly. By giving tenants the chance to make necessary repairs or clean before moving out, you avoid unnecessary disputes and foster goodwill. | One of the most common pain points for landlords is security deposit disputes. Offering a pre-move out inspection minimizes the chances of misunderstandings. When you provide tenants with a detailed list of items that need attention, they are more likely to feel informed and responsible for taking action. This reduces tension and ensures everyone is on the same page when deductions are made. |
A streamlined turnover process means your property is ready for the next tenant sooner. Addressing issues during the pre-move out inspection puts you ahead of the game by identifying what repairs or deep cleaning tasks require attention before re-listing the property.
The faster you can prepare your property, the faster you can secure new tenants, saving you time and money.
Not sure how to get started with this inspection, nor how to conduct it?
This is one great reason to
work with a local property manager who can help you navigate not only the inspection but the entire security deposit return. Here’s how we go about offering tenants their pre-move out inspection:
1. Offer the Inspection in Writing
We start by notifying the tenant of their right to a pre-move out inspection at least two weeks before their move-out date. This notice can be provided via email, certified mail, or hand-delivered. We know tenants are not required to accept this offer, but we’re always encouraging because of the benefits it provides to all of us.
2. Schedule a Convenient Time
We work with the tenant to find a mutually agreed-upon time for the inspection. Keep in mind this walkthrough is a collaborative effort, so being flexible can go a long way in maintaining a positive relationship.
3. Inspect Thoroughly
We bring along the original move-in condition checklist to compare the current state of the property. Our team pays attention to key areas such as walls, flooring, appliances, and fixtures. We are sure to document any damages with photos or notes.
4. Provide a Written Report
After the inspection, we provide the tenant with a detailed written list of any necessary repairs or cleaning. We are clear about which issues may result in deductions from their security deposit if not resolved.
5. Follow Up
We’ll give the tenant a chance to address the issues identified during the inspection. This could include cleaning, repainting walls, or repairing minor damages.
6. Conduct the Final Walkthrough
Once the tenant moves out, we perform the final walkthrough with the written report in hand to verify that the issues have been resolved or determine final deductions.
Our tips for a successful pre-move out inspection are pretty simple:
Offering a pre-move out inspection policy isn’t just about compliance—it’s an opportunity to protect your property, maintain positive tenant relationships, and streamline your turnover process. Fewer disputes mean less stress for you and greater satisfaction for your tenants.
We can talk with you more about the importance of following the law in every part of the move-out process, particularly the security deposit return. If you’re worried about getting the deposit returned within 21 days, struggling over the distinction between wear and tear or damage, and unsure about inspections, we can help.
Contact us at Niguel Point Properties.
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