What Can I Withhold From A Tenant’s Security Deposit?

 

After a lease ends and the tenant moves out, it’s guaranteed that there will be some amount of work that will need to be done to get the property ready to rent again.

This can range anywhere from just a good cleaning to a full scale rehab project. If it’s the latter, this can take weeks to complete and cost thousands of dollars.

Many landlords are left wondering how much of the security deposit they can use to help cover the costs of getting the property prepped and presentable for a new tenant.

The hard part is determining what damage is considered tenant responsibility and what is normal wear and tear, and how much you can charge for each given item.

Also, how long do you have to complete repairs and return the unused portion of the deposit to the tenant?

Some landlords view the security deposit as a bonus that they get for renting out their property that they will keep no matter what. This is not only unethical, but can have some serious legal ramifications as well.

All of this is covered under California Civil Code Section 1950.5 but we’ll go ahead and break it all down for you here.

Security Deposit Limits

Before you get to deducting form a security deposit, it’s important to know how much you can hold as a security deposit in the first place.

California has placed hard limits on this. While the standard amount is typically one month’s rent, you can hold up to:

  • 2 times the monthly rent for an unfurnished rental
  • 3 times the monthly rent for a furnished rental

This law exists to prevent landlords from holding an unreasonably high security deposit and then not returning it to the tenant at the end of the lease.

When you write your lease, it’s important that you don’t characterize the security deposit as “nonrefundable.” This is illegal under California law.

It’s also important that your lease specifically states that the deposit cannot be used as last month’s rent. Allowing the tenant to use the security deposit as last month’s rent can put you in a tough position if there are extensive tenant caused damages. It’s a lot easier to deduct from a security deposit then go after them for more money.

What The Security Deposit Can Be Used For

California law is also very clear on this. Landlords can use a tenant’s security deposit for:

  • Any unpaid rent
  • Repair of damages to the property beyond normal wear and tear
  • Any cleaning needed to get the property back to the level of cleanliness it was at move in

The best way to document the condition of the property at move in is with pictures or even a video walkthrough. This will make it very easy to compare the condition at move out with the condition before the tenant lived there.

Many landlords do not understand what is considered normal wear and tear and what is beyond that.

Normal wear and tear is the average deterioration of a property over its natural lifetime, not caused by neglect or abuse of the property.

California law does not do a very good job of defining normal wear and tear, but HUD does. According to HUD, here are some examples of normal wear and tear vs tenant damage:

Normal Wear and Tear Tenant Damage
 Fading, peeling or cracked paint  Gaping holes in walls or plaster
 Slightly torn or faded wallpaper  Drawings, crayon markings or wallpaper that the owner   did not approve or damaged wallpaper
 Small chips in plaster  Chipped or gouged wood floors
 Nail holes, pin holes or cracks in the wall  Doors ripped off hinges
 Door sticking from humidity  Broken windows
 Cracked window pane from faulty foundation or   building setting  Missing fixtures
 Floors needing coat of varnish  Holes in ceiling from removed fixtures
 Carpet faded or worn thin from walking  Holes, stains or burns in carpet
 Loose grouting and bathroom tiles  Missing or cracked bathroom tiles
 Worn or scratched enamel in old bathtubs, sinks or   toilets  Chipped and broken enamel in bathtubs and sinks
 Rusty shower rod  Clogged or damaged toilet from improper use
 Partially clogged sinks caused by aging pipes  Missing or bent shower rods
 Dirty or faded lamp or window shades  Torn, stained or missing lamp and window shades

It is also helpful to know the normal life expectancy of different major items in your rental property. HUD provides examples of this as well:

Major Item Expected Lifetime
  Interior Painting – enamel  5 years
 Interior Painting – flat  3 years
 Carpet  5 years
  Window shades, screens & blinds  3 years
 Tiles/ Linoleum  5 years
Ranges  20 years
 Refrigerators  10 years

 

If any of these items are at or near their life expectancy, landlords shouldn’t charge tenants for repair or replacement regardless of their condition at move out. These items need to be replaced regularly anyway.

Helping The Tenant Get Their Deposit Back

After a tenant gives you a 30 day notice that they will be vacating the property, you need to notify them of their option for an initial inspection, or as well call it, a pre-move out inspection.

If the tenant does not respond to this notice or does not want to do it, you don’t have to.

The purpose of this inspection is to walkthrough the property with the tenant and point out anything beyond normal wear and tear to give them the opportunity to fix it without having it deducted from their deposit.

Once you agree on a day and time to conduct the inspection, you must give a 48 hour written notice prior to the inspection, unless you both agree to forgo this requirement in writing. This allows the landlord to conduct the inspection whether the tenant is present or not.

Once completed, you should provide the tenant with an itemized list of deductions you plan to make based on the condition of the property. This can cover repairs of anything beyond normal wear and tear or cleaning. The tenant then has the opportunity to take care of these items before they move out.

Writing a Check

The Disposition

After the tenant moves out and you perform any repair or cleaning that you will be deducting from the deposit, you need to return the remainder to the tenant.

A commonly missed deduction is for unpaid water and trash bills. Be sure to call both the local sanitation company and the local water company to see fi the tenant has an outstanding balance because these charges do not follow the tenant like and electric or gas bill, they stay with the property.

You must provide the tenant with an itemized statement and charges incurred for all work over $125 including:

  • All charges for material or supplies with a copy of the invoice or receipt.
  • If you or one of your employees performs the work, an explanation of the work performed as well as time spent and the reasonable hourly rate charged.
  • If performed by an outside vendor, a copy of the bill, invoice or receipt from the vendor as well as their name, address and phone number.

This must be done within 21 calendar days of the tenant vacating the property.

If it can’t be done within 21 days, you can deduct a good faith estimate as long as you provide an itemized statement. Within 14 days of completing the work, you must provide the tenant with the actual itemized statement. Even if you don’t have a forwarding address, send it to the last known address which would be your rental property. Keep a copy of the envelope if it gets returned by the post office. This will protect you if you find yourself in small claims court over a deposit dispute.

If you don’t do this, even if the tenant trashed your house, they can sue you for the amount of the deposit plus twice the amount in damages if the judge determines you retained the deposit in bad faith.

Even if you evict a tenant that potentially owes you thousands in unpaid rent, you MUST perform a disposition. There would be nothing worse than having to give a delinquent tenant their deposit back because you didn’t follow this law.

Summing it up

There’s a lot to California Civil Code Section 1950.5, but this article hit on the most important parts.

If you don’t ever want to have to worry about handling a tenant’s deposit, give us a call or contact us. Move in, pre-move out, and move out inspections as well as deposit dispositions are just a few of the services that we provide here at Mesa Properties.

For a comprehensive guide to managing rental property, check out this resource.

Sawyer Shwetz

Property Manager

Sawyer is an Assistant Property Manager at Mesa Properties Inc. He focuses primarily on property management and improving “behind the scenes” processes. Sawyer obtained his Bachelors of Science degree in Manufacturing Engineering from Cal Poly Pomona.

During his college years, Sawyer worked at NASA’s Jet Propulsion Laboratory where he designed and implemented new destructive tests for flight hardware prototypes. He also conducted heat treatment operations for projects including the Mars 2020 Rover, Mars Insight, and the ISS.

Sawyer has been involved in the property management business since High School. He enjoys business more than engineering, which is why he has decided to pursue a career in property management.

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Allan Miraflor

Maintenance Coordinator

Allan is our maintenance coordinator at Mesa Properties. He helps tenants with their maintenance needs, and coordinate with vendors with scheduling and completion of work orders. He has 10 years of customer service and sales experience in the financial industries, healthcare, telecommunications and satellite TV. He has studied business management for 3 years and holds a certificate for general education from Brigham Young University Idaho. Allan is a basketball fanatic and always want his Golden State Warriors to win every year in the NBA finals. When he’s not working he loves to spend time with his wife and two children going to Korean and Japanese buffets.

Meghan Miller

Accounting

Meghan is one of the newest members of our Mesa Properties Inc. Team and works in our accounting department. She studied accounting at Chaffey College. Prior to joining Mesa Properties Inc., Meghan was a bookkeeper for 6 years at a CPA firm that primarily worked with dairy farms. She enjoys working for Mesa Properties Inc. because she is able to use her accounting experience in whole new ways and also enjoys the friendly office environment that has been established here. Meghan resides in Rancho Cucamonga with her husband and two sons.

Rebecca Anthony

Administrative Assistant

Rebecca is one of our administrative assistants and is one of the warm and friendly voices you will hear when you call our office. She has a strong customer experience background from her past role with Sprint and loves assisting our owners and tenants. When she isn’t working, Rebecca loves to bake and spend time with her son and family.

Steve Shwetz

Managing Broker

Steve, the Managing Broker and Founder of Mesa Properties Inc. & Mesa Real Estate, began his real estate career buying, fixing and reselling distressed properties in Southern California. Seeing the long-term opportunity in a buy and hold strategy, Steve began acquiring residential real estate to build his own real estate rental portfolio. As a 10 year owner of an international service franchise, Steve saw an opportunity to take his experience in customer service and developing systems and processes and apply that experience to the world of property management and real estate. Prior to starting his own businesses Steve held various senior and advisory level sales positions with IBM Corp., B. Braun Medical, Insight Direct & Reach Local. Steve is a licensed real estate broker and holds a Bachelors in Business from the University of Southern California.

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Sheryl Shwetz

General Manager, Administration

Sheryl helped to establish Mesa Properties Inc. with Steve. Today, she serves as the backbone of all things administrative for the company. Sheryl oversees all the details of running a property management company including on-boarding new owners, converting applicants to tenants, and paying all vendors. After earning her B.S. in Business Administration from the University of Phoenix, Sheryl worked for a software development company running the support and training department and writing user documentation. Sheryl also gained experience at an advertising agency servicing non-profit organizations where she drafted vendor instructions for merging customer data with various fundraising campaigns. Sheryl has 3 sons and home-schooled them through various stages of their K-8 education. Each one is now thriving in adulthood.

Sam Shwetz

Business Development Manager

Sam is the Business Development Manager at Mesa Properties Inc. focusing on engaging both new and existing owners of residential and commercial properties.  Sam is a U.S. Navy veteran having served in the Nuclear Field on the USS Ronald Reagan aircraft carrier.

After his military service , Sam worked for a lighting control company as a field service engineer on various projects including extensive work on Apple’s new corporate headquarters in Cupertino California.

Sam and his wife Sydney are homeowners in Ontario, CA where they live with their golden retriever.

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Verenice Guardado Alvarado

Lead Office Administrator

Verenice is the office administrator to our Mesa Properties Inc. Team. She is also licensed and manages properties in the high desert. She earned her Associate’s Degree in Business Administration from San Joaquin Valley College and used her skills working in customer service. Previously, Verenice worked 4 years with Target where she trained sales associates and developed strong communication and teamwork skills. Through her position at Mesa Properties Inc., Verenice strives to find the right tenant for each owner and the right home for each tenant.

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Mark Parmenter

Property Manager

Prior to joining Mesa Properties Inc., Mark worked in the construction industry as a member of the carpenters union. He holds an Associates degree in Business, he is a licensed agent, certified in property management and enjoys the unique challenges of property management. Mark is a homeowner himself and experienced with on site multi-unit management. He understands the delicate balance of working with tenants as a landlord, owner and neighbor.

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Joshua Long

Property Manager

Joshua is a property manager to the Mesa Properties Inc. team. With a background in sales, Joshua gained the strong communication skills necessary to be an effective problem solver when handling any situation he is faced with. Growing up, Joshua watched his mother work as an apartment manager for over 20 years. Now, as a property manager, Joshua focuses on addressing the needs of both renters and homeowners. He is a focused hard-worker who ambitiously seeks to become better in his position and to gain more knowledge at whatever task is at hand. Joshua is an Upland area native and is a licensed real estate agent. He currently holds 2 Associate’s Degrees and is working towards gaining his Bachelor’s Degree in Business Administration from CSUSB.

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Bridget O'Gorman

Assistant Property Manager

Bridget is now a property manager to the Mesa Properties Inc. team. She currently resides in Victorville with her daughter. In 2014, Bridget obtained her Associate’s Degree in Business Administration from San Joaquin Valley College with a 4.0 GPA. Prior to working for Mesa Properties Inc., she has held various customer service jobs, where she gained better understanding of how to handle different situations and how to work with each person on an individual level. In addition, Bridget worked as a safety manager and recruiting assistant for a transportation company, giving her experience in processing applications and completing safety inspections. Bridget enjoys working for a company where she is able to assist others and to work in a changing environment, which is always giving her a chance for a new experience.

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Julia Morrison

Property Manager

Julia is a property manager to the Mesa Properties Inc. Team! Julia currently holds an Associates degree in Criminal Justice. She is currently enrolled at CSUSB with plans of going to law school after. Having worked 4 years in a customer service field, Julia has gained much experience in working with difficult situations and learned how to be a team leader. Prior to working in customer service, Julia worked for an HOA, where she gained computer & phone skills and learned how to handle an overflowing stack of paperwork! She enjoys working with people and assisting them in finding a home that they love. Julia became a homeowner in 2016 and currently resides in Upland with her fiance.

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Autumn Janda

Tenant Screening

Autumn gained her real estate license in 2011, but has been in the property management field since 2005. She obtained her Bachelor’s degree in Business Administration from CSUSB in 2009. Prior to joining Mesa Properties Inc., Autumn gained much of her experience being an assistant property manager for commercial properties for six years! She also spent five years working in a company that worked with commercial, industrial, and apartment properties. Autumn enjoys working for Mesa Properties Inc. because she gets to work with new tasks everyday and likes meeting new people. She is currently a homeowner in Arizona, where she resides with her husband and daughter.

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Donna Pulver

Receptionist

Donna is the receptionist to our Mesa Properties Inc. Team since November of 2016! Her tasks include answering calls, scheduling showing appointments, processing adverse action letters, assisting with applications, and assisting customers in the front desk. Having worked over 25 years for a real estate appraisal company located in Covina, Donna has gained much experience in providing great customer service. Donna currently lives in Victorville.

Carmen Franco

Administrative Assistant

Carmen is one of the newest members to the Mesa Properties Inc. Team! Her tasks include showing available rental properties, assisting with phone calls, and completing inspections. Carmen graduated from University Preparatory High School in 2011. She has earned her certificate in Business Administration from San Joaquin Valley College with a 4.0 GPA. Getting to know the team at Mesa Properties Inc., Carmen has been inspired to pursue a career in property management. She is eager to learn more about property management and prides herself in bringing a positive and caring attitude to everyone and everything she does. Carmen resides in Apple Valley with her husband and 2 children.

Amairani Palacios

Transaction Coordinator

Amairani is the transaction coordinator to the Mesa Properties Inc. Team! Her main role is coordinating real estate transactions for the real estate agents. Her other tasks include assisting the property managers with inspections, calls, and emails. Having been a member in the AFJROTC program for Victor Valley High School for 3 years, Amairani has gained experience in coordinating tasks and working with other team members as a Team Leader. Amairani has completed the needed real estate courses and is working on obtaining her real estate license.

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Michael Melendez

Real Estate Agent

Mike has been practicing real estate in Southern California since 2006. His family and friends have always been involved in home loans, new construction, and rehabilitation projects, deepening his knowledge of all aspects of the industry. As a Realtor, Mike’s service’s consist of helping buyers and sellers obtain property that best suits their interests. Finding his clients great deals, maximizing their proceeds and finding them the right home is what he does best. Mike understands that real estate is one of the biggest purchases and sales that can be made, and choosing the right agent is an important decision. He has both the experience and technology to help his clients meet their goals.

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Sonya Dod

Real Estate Agent

Sonya Dod has been a licensed real estate agent since 1989, Sonya is an agent who facilitates successful transactions for buyers as well as sellers, boasting a solid reputation for making deals with honesty and integrity. Since Sonya was raised on a Texas farm, she isn’t afraid of hard work and long hours. After her parents moved to California 40 years ago, they started buying investment properties. So she grew familiar and comfortable with the process of finding, fixing up and selling properties at an early age. Having served as an underwriter, processor and loan officer, Sonya has the knowledge and experience necessary to help sellers and buyers avoid wasting time opening meaningless transactions. What’s more, sellers are protected by her expertise as she requires buyers to provide written permission to speak directly to lenders. This unique approach fosters quickly closed deals and eliminates false representation.

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Raymond Palacios

Administrative Assistant

Raymond is an administrative assistant to the Mesa Properties Inc. Team! His tasks include performing inspections, showing properties, serving documents, and assisting with phone calls. Raymond holds a Bachelors in Business Management from California State University of San Bernardino. Having worked 4 years at a customer service field, Raymond has gained much experience in assisting and providing great quality customer service. Prior to working in customer service, Raymond volunteered and worked 6 years for a food distribution center where he gained the experience in efficiently coordinating important tasks within a company.