Refunding Security Deposits

Refunding your security deposit pic

Refunding security deposits

What is the law regarding refunding security deposits?

1. California law specifies procedures that the landlord must follow for refunding, using, and accounting for tenants’ security deposits.

2. California law specifically allows the landlord to use a tenant’s security deposit for four purposes:

  • For unpaid rent;
  •  For cleaning the rental unit when the tenant moves out, but only to make the unit as clean as it was when the tenant first moved in;
  • For repair of damages, other than normal wear and tear, caused by the tenant or the tenant’s guests;
  • and if the lease or rental agreement allows it, for the cost of restoring or replacing furniture, furnishings, or other items of personal property (including keys), other than because of normal wear and tear.

3. A landlord can withhold from the security deposit only those amounts that are reasonably necessary for these purposes. The security deposit cannot be used for repairing defects that existed in the unit before you moved in, for conditions caused by normal wear and tear during your tenancy or previous tenancies, or for cleaning a rental unit that is as clean as it was when you moved in.

4. A rental agreement or lease can never state that a security deposit is “nonrefundable.”

5. Under California law, 21 calendar days or less after you move, your landlord must either:

  • Send you a full refund of your security deposit, or
  • Mail or personally deliver to you an itemized statement that lists the amounts of any deductions from your security deposit and the reasons for the deductions, together with a refund of any amounts not deducted.

6. The landlord also must send you copies of receipts for the charges that the landlord incurred to repair or clean the rental unit and that the landlord deducted from your security deposit.

7. The landlord must include the receipts with the itemized statement.  The landlord must follow these rules:

  • If the landlord or the landlord’s employees did the work– The itemized statement must describe the work performed, including the time spent and the hourly rate charged. The hourly rate must be reasonable.
  • If another person or business did the work– The landlord must provide you copies of the person’s or business’ invoice or receipt. The landlord must provide the person’s or business’ name, address, and telephone number on the invoice or receipt, or in the itemized statement.
  • If the landlord deducted for materials or supplies– The landlord must provide you a copy of the invoice or receipt. If the item used to repair or clean the unit is something that the landlord purchases regularly or in bulk, the landlord must reasonably document the item’s cost (for example, by an invoice, a receipt or a vendor’s price list).
  • If the landlord made a good faith estimate of charges– The landlord is allowed to make a good faith estimate of charges and include the estimate in the itemized statement in two situations: (1) the repair is being done by the landlord or an employee and cannot reasonably be completed within the 21 days, or (2) services or materials are being supplied by another person or business and the landlord does not have the invoice or receipt within the 21 days. In either situation, the landlord may deduct the estimated amount from your security deposit. In situation (2), the landlord must include the name, address and telephone number of the person or business that is supplying the services or materials.
  • Within 14 calendar days after completing the repairs or receiving the invoice or receipt, the landlord must mail or deliver to you a correct itemized statement, the invoices and receipts described above, and any refund to which you are entitled.
  1. The landlord must send the itemized statement, copies of invoices or receipts, and any good faith estimate to you at the address that you provide. If you do not provide an address, the landlord must send these documents to the address of the rental unit that you moved from.

9. The landlord is not required to send you copies of invoices or receipts, or a good faith estimate, if the repairs or cleaning cost less than $126 or if you waive your right to receive them. If you wish to waive the right to receive these documents, you may do so by signing a waiver when the landlord gives you a 30-day or 60-day notice to end the tenancy, when you give the landlord a 30-day notice to end the tenancy, when the landlord servers you with a three-day note to end the tenancy or after any of these notices. If you have a lease, you may waive this right no earlier than 60 days before the lease ends. The waiver form given to you by the landlord must include the text of the security deposit law that describes your right to receive receipts.

10. What if the repairs cost less than $126 or you waived your right to receive copies of invoices, receipts and any good faith estimate? The landlord still must send you an itemized statement 21 calendar days or less after you move, along with a refund of any amounts not deducted from your security deposit. When you receive the itemized statement, you may decide that you want copies of the landlord’s invoices, receipts and any good faith estimate. You may request copies of these documents from the landlord within 14 calendar days after you receive the itemized statement. It’s best to make this request both orally and in writing. Keep a copy of your letter or e-mail. The landlord must send you copies of invoices, receipts and any good faith estimate within 14 calendar days after he or she receives your request.

11. What should you do if you believe that your landlord has made an improper deduction from your security deposit, or if the landlord keeps all of the deposit without good reason?

12. Tell the landlord or the landlord’s agent why you believe that the deductions from your security deposit are improper. Immediately ask the landlord or agent for a refund of the amount that you believe you’re entitled to get back. You can make this request by phone or e-mail, but you should follow it up with a letter. The letter should state the reasons that you believe the deductions are improper, and the amount that you feel should be returned to you. Keep a copy of your letter. It’s a good idea to send the letter to the landlord or agent by certified mail and to request a return receipt to prove that the landlord or agent received the letter. Or, you can deliver the letter personally and ask the landlord or agent to acknowledge receipt by signing and dating your copy of the letter.

  1. If the landlord or agent still doesn’t send you the refund that you think you’re entitled to receive, try to work out a reasonable compromise that is acceptable to both of you. You also can suggest that the dispute be mediated by a neutral third person or agency.
  1. What if the landlord doesn’t provide a full refund, or a statement of deductions and a refund of amounts not deducted, by the end of the 21-day period as required by law? According to a California Supreme Court decision, the landlord loses the right to keep any of the security deposit and must return the entire deposit to you. Even so, it may be difficult for you to get your entire deposit back from the landlord.
  1. Practically speaking, you have two options if the landlord doesn’t honor the 21-day rule. The first step for both is to call and write the landlord to request a refund of your entire security deposit. You can also suggest that the dispute be mediated. If the landlord presents good reasons for keeping some or all of your deposit for a purpose listed above, it’s probably wise to enter into a reasonable compromise with the landlord. This is because the other option is difficult and the outcome may be uncertain.
  1. The other option is to sue the landlord in small claims court for return of your security deposit. However, the landlord then can file a counterclaim against you. In the counterclaim, the landlord can assert a right to make deductions from the deposit, for example, for unpaid rent or for damage to the rental that the landlord alleges that you caused. Each party then will have to argue in court why he or she is entitled to the deposit.