Security Deposits

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Tip Sheet: Security Deposits

When you move into an apartment or house, the landlord is entitled to collect a security deposit. The security deposit must be refundable (subject to potential deductions described below), and cannot be more than two months’ rent (if the premises are unfurnished) or three months’ rent (if the premises are furnished)

How a Security Deposit May be Used by the Landlord

A landlord may only apply all or part of the security deposit to pay for one of the following:

  • Unpaid rent.
  • Repairing damage, in excess of ordinary wear and tear, caused by the tenant.
  • Cleaning the premises after the tenant moves out, if cleaning is necessary to return the premises to the level of cleanliness when the tenant moved in.
  • If specified in the lease, personal property that the tenant failed to restore or replace.

The Landlord’s Duty to Return Your Security Deposit

Within three weeks after you move out, the landlord is required to:

  • Return your entire security deposit, or
  • Provide you with an itemized written statement that explains any deductions from the deposit (receipts and/or invoices must be included if more than $125 is being withheld), and return the remaining amount of the deposit to you.
  • Exception – multiple roommates: when two or more roommates rent under the same lease, the landlord does not have to return the deposit until all of the original tenants under the lease move out. If you live with one or more roommates and move out before they do, you may be able to work out an agreement with the landlord for the return of your share of the security deposit; otherwise, it will be up to you to make some arrangement with your roommates and/or the new tenant that may be replacing you to get your portion of the deposit returned to you.

Security Deposit as Last Mont’s Rent

So long as your deposit is identified in your lease or another writing as a “security deposit,” you cannot use it to pay rent without the landlord’s written permission. However, if your deposit is specifically noted as “last month’s rent,” then you have the right to apply it to your last month’s rent. If the landlord tells you when you enter the lease that you can use your deposit for the last month’s rent, be sure it is designated that way on the receipt or in the lease before you sign.

If at the end of your tenancy, you don’t pay your last month’s rent, your landlord is allowed to use your security deposit to cover the unpaid rent, as discussed above. In this situation, your landlord could also theoretically try to evict you for nonpayment of rent – but if it’s the last month of the lease, and you have already given notice of your intent to vacate at the end of that month, the risk is low.

However, using your security deposit as last month’s rent does carry some risk. For example, if you did not pay your last month’s rent and you asked your landlord to use your security deposit to cover that last month of rent, but your landlord has other lawful deductions from your Security Deposit (such as cleaning or repair of damage beyond ordinary wear and tear), then your landlord could claim the you owe additional money, and use a collections agency or file a lawsuit against you in Small Claims Court to recover the money.

Planning Ahead for the Return of Your Security Deposit

You can take several steps to help ensure that the landlord will return your security deposit:

  • Document the amount of your security deposit. Make sure the deposit amount is in the lease, note on any deposit check that it is for a security deposit, and (especially when paying cash) obtain a written receipt from the landlord indicating the amount paid for security.
  • Inspect the premises before you move in. Take “before” pictures at this time, and notify the landlord of any damage, unusual wear and tear, or other problems that you notice.
  • Clean the premises before moving out. Take “after” pictures to show that you left the place as clean as it was when you moved in.
  • Request a pre-move-out inspection. If your lease began on or after January 1, 2003, you can demand that your landlord inspect the premises before you move out and tell you what repairs or cleaning will be required for the return of your deposit. These are the steps:
    • After you’ve given notice that you’ll be terminating your tenancy, make a request in writing to the landlord for a pre-move-out inspection.
    • Arrange a time that works best for both you and the landlord. The inspection must occur no more than two weeks before the termination of the tenancy, and the landlord is required to provide at least 48 hours written notice of the time of the inspection; any inspection on less than 48 hours notice must be agreed to in writing between you and the landlord.
    • After the inspection, the landlord must give you an itemized list of the planned deductions from your deposit. You have the right to try to fix these problems before your tenancy terminates. The landlord may later make deductions for problems that remain after your departure if you did not repair them, if they happened after the inspection, or if they were not visible during the inspection.
    • As described above, if deductions are made after you move out, the landlord must provide written documentation and invoices/receipts if more than $125 is deducted.
    • Even if the landlord cannot complete the work within three weeks, or does not have the required receipts, the landlord may deduct a good faith estimate of the expenses, but is required to provide you with receipts within 14 days of receiving them.
  • Provide the landlord with a forwarding address where the security deposit can be mailed.

Interest on Security Deposits

California state law does not require landlords to pay interest on security deposits. However, the rent control law in Berkeley (but not Oakland) does require the payment of interest:

  • Berkeley landlords subject to the rent control ordinance (as well as some other landlords) are required to pay interest at a rate equal to the average rate on 6-month Certificates of Deposit over the preceding year. The Rent Board publishes this average rate each year before November 15 on its Web site.
  • Interest on security deposits accrued through October 31 of each year must be paid to tenants every December as a cash payment or as a rent rebate.
  • If a landlord fails to pay out this accrued interest by January 10, tenants have the right (after giving 15 days’ written notice to the landlord) to deduct it from their rent at a simple annual interest rate of 10%. Upon receiving this notice, the landlord has the option to provide a cash refund at the 10% rate before the amount is deducted by the tenant from rent.

If Your Deposit is Not Returned Within Three Weeks

If your landlord fails to return your security deposit within three weeks or makes improper deductions from your deposit, follow these steps:

  • First, send your landlord a demand letter requesting prompt payment of any portion of the security deposit to which you believe you are entitled. A sample demand letter is available in the “Forms” section of the Student Legal Services Web site.
  • Do your best to resolve the problem informally by following up with the landlord. If you think your use of the premises may have been in excess of normal wear and tear, or if you didn’t leave it as clean as it was when you arrived, consider negotiating with the landlord about the amount of deposit that will be returned.
  • If the landlord is not responsive to your demand letter or other efforts to resolve the disagreement, your next step will be to file a lawsuit against the landlord. In almost all cases, you will be able to sue in Small Claims Court, where the maximum claim amount is $12,500. If you decide to take this route, be aware that:
    • You will typically need to sue the owner of the building, not the property manager.
    • In addition to suing for the amount of your deposit that should be returned, you may also ask the court to award you an additional amount of up twice the amount of the security deposit as a penalty if you believe the landlord withheld it in “bad faith.”
  • For more information about Small Claims Court, review the California Courts Small Claims Self-Help Web site, go to the Alameda County Small Claims information page, read a Practical Use Guide, and/or make an appointment with Student Legal Services at sls.berkeley.edu.
  • Information about your rights is also available in the Department of Consumer Affairs California Tenants Guide.