Mike Explains: Return of Tenant Security Deposits

Imagine, if you will. You spent the last month getting this property ready for the new tenants. Not after much work and expense, it’s ready to rent.  To your surprise, you get served to go to small claim's court. But, your old tenants trashed the property, and now want to take you in front of the judge trying to get their security deposit back. Well, you know how they left the property, so you're happy to go talk to the judge. To your surprise, you lose!

Often, the most contentious part of the landlord-tenant relationship is the return of the security deposit.

Security Deposit

Is money that the tenant gives the landlord to hold in case there's damage done to the property or if the tenant does not live up to the terms of the lease.

In this case, the tenants did more damage to the property than the security deposit covered.  Which /9if handled correctly) the landlord could potentially recover.  Unfortunately, the landlord did not follow the rules.

Here are some of the rules you need to know as a landlord:

In California, the landlord has 21 days to settle. When a tenant moves out, if you do not return the security deposit in full, the landlord must provide a letter of explanation of why they did not, along with a detailed accounting including receipts for any item over 125 dollars.

In California, the landlord can deduct from a tenant security deposit for the following reasons:

  1. Repairs - the cost of fixing any damage to the property that the tenant may have done if it is not ordinary wear and tear.
  2. Cleaning – the cost of cleaning provided cost of cleaning the property that is putting it back in the same condition that it was when the tenant originally rented it.
  3. Unpaid Rent - any unpaid rent the tenant may owe, including rent owed because the tenant did not give proper notice.

The landlord can withhold from the security deposit for repairs that are only necessary and reasonable, and this does not include ordinary wear and tear. To be fair, ordinary wear and tear may seem kind of arbitrary. Thus, the use of reasonable judgment and experience goes into play here.

For example, the tenants hung what you consider many pictures in the house, and they're gone three months later, and you have to repair all the holes for the pictures being up, it’s reasonable to charge for that. Whereas, if the tenant fulfilled their year lease, and they just hung a normal number of pictures: that's ordinary wear and tear and fair not to charge it.

These items can often be argued i.e., paint, most places will consider three years the normal lifespan. So, if you're a landlord and you're going for something that's not ordinary wear and tear, or you want to prorate that, you need to argue for it. A good, common sense, reasonable argument.

Tips for Tenants 

Complete your Move-In Inspection Form.  When you move in, you most likely got the form that had to be turned in within 3 to 5 days.  This form documents the condition noticed on your leased property. Sometimes, busy tenants don't want to deal with what may be perceived as another “silly piece of paper”. This form is for your protection, so fill it out. 

Also, take pictures. Digital pictures, taken from your phone. It all matters.

Tips for Landlords

  1. Keep good records.
  2. Get the statement out within 21 days.
  3. Provide receipts.
  4. Do not be greedy in the deduction process.
  5. Enlist the help of a Property Manager when needed. They will be serving as a referee, or arbitrator in these times, and is money well-spent.  

If you want to find out more about security deposits, property management, or anything real estate, we would be more than happy to talk with you at the Mike Dunfee Group.

Dunfee Real Estate Services, Inc.
DRE # 02026232

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