Business Real Estate

Know Limits of Security Deposits Before Renting

From the plushest mansion to the plainest walk-up, all tenants share this question: How much security deposit is required for move-in?

In this hot market, renters are vying for places, but they may not know the law protects, defines and regulates that question under California state law, primarily Civil Section 1950.5 (available in detail at www.leginfo.ca.gov). Here are a few highlights to give you some security before you deposit:

Move-in fees and deposits go by several names and all have a part to play. However, no matter what term is used by the landlord, such as "cleaning deposit," "key deposit," "pet deposit" or even "last month's rent," the law considers all money taken as the same thing--security deposit. While there is no minimum deposit amount set by law, California state law defines maximum security deposit and couches the specifics based on furnishings.

Unfurnished rentals have a set limit that cannot exceed two months' worth of rent. For example, if your rent is $1,000 a month, the maximum security deposit you can be asked to pay for an unfurnished place is $2,000. At move-in, your cost could be $3,000 total (deposit plus rent for the first month).

Furnished property allows up to three months' rent ($4,000 total for the above example) as security deposit. Recently I read about a new landlord charging extra for a stove since he claimed that made the place "furnished." That concept doesn't stand up to scrutiny.

"Furnished" is defined as providing basic furniture for living in the place, including, but not limited to a couch or chairs for the living room, a bed in each bedroom and a table with chairs for dining. In addition, a refrigerator and stove must be included in furnished rentals.

According to state law, the cost for credit checks or application fee is not part of the move-in fee and is allowed to be nonrefundable, unless taken improperly. What is improper? When an application and fee are taken and the landlord knows (or should have) that no rental unit was available at that time or will be within a reasonable period of time. The legal limit for a landlord to collect for applicants is currently $30 per person. You are entitled to a copy of your credit check for no additional charge.

What if your landlord refuses to rent to you and your beloved dog unless you pay a separate "pet deposit"? Can you sign a pet deposit agreement on the side and pay a little extra deposit for the varmint? Yes and no.

Yes, you can sign whatever you find palatable as a consenting adult, but not if your legal rights are violated or breached in any way. No, you can't sign away a legal right in the state of California. The pet deposit still has to be within the legal security deposit limit, even if both landlord and tenant agree to a higher amount.

Recently a friend called me, bursting with excitement over her new place. "I'm so excited," she said, "I finally found an apartment that would let me have my dog Max!" No small feat, since Max is the size of a bus with fur. "How much was the deposit?" I asked.

Turned out the landlady took two months security, plus a $500 pet deposit, plus $85 nonrefundable cleaning fee. Except for the two months' security, the rest the landlady took has been illegal since before 1986. Nonrefundable deposit fees are illegal.

Some landlords or managers are a bit rusty on the law, since no education is required. The only exception is for off-site managers, who are supposed to have a current California real estate license, which requires testing and continuing education.

How to avoid getting stuck with an illegal or excessive deposit fee? If you are being asked an excessive fee, politely ask what it is for. If it is called a "fee," and is claimed to be separate, you could always mention the limit in California is two months' rent.

Disagree agreeably. Perhaps the landlord or manager is willing to listen. If not, their request for excessive fees may be a hint of life as a tenant in their property. Do you really want to walk into and live in a place that starts off on an illegal foot?

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H. May Spitz is a Los Angeles-based freelance writer. Comments may be sent to hmayspitz@aol.com.

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