Security deposit disputes are not uncommon, and they can be a huge headache for Los Angeles property managers and landlords. The best way to avoid any conflicts with your residents is by understanding the details of California’s security deposit laws and documenting the condition of your rental home before and after the tenancy.
We’re providing a high-level summary of the most important things you need to know when it comes to security deposits and the disputes that may arise.
Security Deposit Limits in California
California security deposit law sets specific limits for the amount you can collect. If you try to go over this limit when a tenant is preparing to move in, you’ll find yourself in a lot of legal trouble.
For unfurnished Los Angeles rental properties, the maximum amount you can collect in a security deposit is the equivalent of two months of rent. So, if you’re renting out a home for $2,500 per month, your security deposit can be no more than $5,000. If you’re renting out a furnished home, the limit is three times the monthly rent. So, a furnished home at that same rental value would allow a security deposit of up to $7,500.
Do not exceed the legal limit of what you can collect. This will get your lease term off to a very bad start.
Wear and Tear vs. Tenant Damage
The most common reason for security deposit disputes is when the landlord and the tenant cannot agree on what is considered normal wear and tear (the responsibility of the landlord) and what is considered damage (the responsibility of the departing tenant).
This can be an extremely subjective area, and it requires you to have excellent documentation from your move-in and move-out inspection reports.
You are required to offer tenants a pre-move-out inspection of the rental property before the end of their lease term. Most tenants are not interested in this, but you still need to make the offer. If the tenants do request it, walk through the property with them and point out any potential security deposit deductions. This will help you avoid disputes by having an honest conversation with your tenant about what you will deduct for damage.
After your tenants have vacated and you’ve received the keys and a forwarding address, inspect the vacant property and document its condition. Bring your move-in inspection report with you so you can compare the condition of the home at this point to the condition it was in when the tenants took possession.
Do not mistake normal wear and tear for damage. Small nail holes in the walls and scuff marks from where the sofa rested cannot be charged to the tenant.
Take pictures to document the property’s condition. If you notice damages that are beyond normal wear and tear, you can charge for that. Make sure you can demonstrate that those things were not broken or damaged at the beginning of the lease.
Missing the Security Deposit Deadline
California law requires you to return the security deposit to the tenants within 21 days of the tenant moving out. If the tenant isn’t receiving a full deposit refund, you should send the amount that they are getting back with an itemized list of what you’ve deducted and why. Be specific and include receipts, invoices, and other documentation to support what you’ve charged.
If your tenant disputes what you’ve withheld or you don’t return the deposit in time, you could face penalties of three times the amount of the original security deposit. It’s important that you know what’s expected of you, and that you follow the law.
We can help you avoid security deposit disputes and a lot of the risk involved in renting out a Los Angeles property. Contact us at EGL Properties for all your LA property management needs.