In today’s challenging economic landscape tenant’s and owners are looking to save every penny they can. We have had several questions come up recently regarding how to handle a tenant’s security deposit. This is as agood as time as any to bring everyone up to speed on how security deposits should be handled and what the rules are regarding security deposits.

All too often we see owners try to keep portions of a tenant’s deposit. This is probably the number one complaint in property management. We try to avert this by making sure all parties are on the same page when the lease is signed. Having a clear and concise lease agreement can avoid headaches later. We also suggest that owners deliver the property broom clean. This means that the owner has thouroughly cleaned the unit from top to bottom. Clean the carpets, windows, baseboards, everything. Take photos to document it and you will be on your way to having a haslle free experience.


California Law allows owners to collect up to two months rent for unfurnished units and three months rent for furnished units. This includes any pet deposit or anything else. We typically encourgae owners to lump everything together and call it a security deposit. Not last month’s rent or a pet deposit. If you call, $500.00 a  pet deposit and the tenant moves out and doesn’t pay the rent you may have to return the pet deposit since that is what is was. The pet didn’t damage anything.

Use Of Deposit

Landlords are limited in what they can use the security deposit for.

1) The compensation of a landlord for a tenant’s default in the payment of rent.
(2) The repair of damages to the premises, exclusive of ordinary wear and tear, caused by the tenant or by a guest or licensee of the tenant.
(3) The cleaning of the premises upon termination of the tenancy necessary to return the unit to the same level of cleanliness it was in at the inception of the tenancy. The amendments to this paragraph enacted by the act adding this sentence shall apply only to tenancies for which the tenant’s right to occupy begins after January 1, 2003.
(4) To remedy future defaults by the tenant in any obligation under the rental agreement to restore, replace, or return personal property or appurtenances, exclusive of ordinary wear and tear, if the security deposit is authorized to be applied thereto by the rental agreement. 

Moving Out

When it is time to move out a tenant has the right to request that the landlord inspect the property 14 days before they leave. During this pre-move-out inspection the landlord should let the tenant know if they see any obvious deductions. The tenant then has the right to remedy these items before they move-out. Once the tenant has vacated the premises the landlord should inspect the home and  thouroghly document any possible deductions. Take pictures and male a list of any repairs that need to be done. The tenant has a right to copies of all invoices of any repairs that will be done.


  • Landlords have up to 21 days to return a tenants deposit.
  • Most cities do not require landlords to pay interest on a deposit.
  • Landlords can’t deduct for Normal Wear and Tear

You can download our landlord tenant handbook or email us for a free copy.

Landlord Tenant Handbook

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