security deposits for rental properties
Q: I recently purchased a second home with the intention to rent it, but I do not know how much I can charge as a security deposit, or the procedure I should follow in accounting for the security deposit after the tenancy ends. Can you provide me with the basic information I need to follow regarding security deposits?
A: Security deposits on residential rental property are governed primarily by California’s Civil Code, section 1950.5. Residential rental “security” is “any payment, fee, deposit or charge” that is imposed at the beginning of the tenancy to be used to reimburse the landlord for costs associated with processing a new tenant or imposed as an advance payment of rent, to be used for a default in the payment of rent, for the repair of damage to the premises other than ordinary wear and tear, for cleaning necessary to return the unit to the same level of cleanliness it was in at the inception of the tenancy and, if the rental agreement expressly so provides, to remedy tenant defaults in the obligation to restore, replace or return personal property or appurtenances (exclusive of ordinary wear and tear). The label given a payment at the outset of the tenancy is not controlling and any fee, however denominated, is considered a security deposit. Continue reading