Statute on Refunds
Security deposit issues are governed by state law. Under Civil Code section 1950.5, a landlord may collect up to two month’s rent for deposits on unfurnished apartments and three months for furnished apartments. There is no such thing as a non-refundable security deposit. Any money paid over the amount of the first month’s rent is refundable.
Normal Wear and Tear
If you owe back rent or you have damaged your apartment beyond “normal wear and tear,” your landlord can deduct those costs from your security deposit. They can also deduct for storing or disposing of your unclaimed property. If you owe your landlord more than the amount of your deposit, they may sue you in small claims court. On the other hand, if you owe them less, they must return all or part of your security deposit, and you can sue them in small claims court.
You are not liable for damage by a storm, fire or vandalism that is not included in “normal wear and tear.” Cleaning costs are not recoverable by the landlord unless the landlord had the place professionally cleaned before you moved in.
You are entitled to request a walk-through inspection prior to the final inspection, but no earlier than two weeks before the termination of tenancy. Based on the walk-through inspection, your landlord is required to give an itemized list specifying proposed repairs or cleanings. You will have the opportunity to address the items highlighted by your landlord prior to vacating.
No later than twenty-one days after you vacated, your landlord must either return all of your security deposit or send you a letter telling you why they are not giving some or all of it back. The letter will be sent to your “last known address.” Make sure the landlord knows your new address or that your mail is being forwarded to the new address. Many courts ignore this twenty-one day requirement. Just because a landlord has not given your deposit back or an itemized list within twenty-one days, does not mean you will automatically be entitled to return of your full deposit. Landlords are entitled to take out for damage beyond wear and tear.
Return of security deposits for commercial leases is governed by Civil Code section 1950.7. If a deposit was used to cover only defaults in the payment of rent, then the balance should be returned to you within two weeks after the landlord has possession of the property.
Bad Faith Retention
Landlords and their successors in interest are liable for damages under Civil Code section 1950.5 for a “bad faith” retention of security deposits. You can get your actual damages plus statutory damages of up to twice the amount of the security deposit.
If your rental unit went through foreclosure, both the old landlord and new owners will be jointly and severally liable for the full amount of the security deposit. This means that you can sue both the new owner and old owner for the full amount, and they can bicker over who owes what.
If your security deposit was less than $10,000, your remedy is to file in small claims court. You must send a demand letter to the landlord before you file. If the deposit was in excess of $10,000, it is a good idea to get legal help.
It is important to contact a tenant attorney before you proceed with a small claims court action against your landlord, even if for a brief phone consult. For one thing, your landlord might file a cross-claim against you for even more than the amount of the deposit. And, you may have a better claim against your landlord and may be waiving certain rights by filing in small claims court.