Little Security in Security-Deposit Law
“With the possible exceptions of relationships between husbands and wives and employees and employers, no relationship occurs more frequently in California than that of landlords and tenants,” observed Justice Donald B. King in a recent case involving a most common point of contention--security deposits. King is an associate justice in the First Appellate District of the California Court of Appeal.
Justice King was trying to interpret the state law that authorizes and controls the use of security deposits, and he was clearly frustrated by the words the Legislature had chosen. “In its present form,” he said, “laymen trying to read and understand this statute must easily identify with the experiences Alice found in Wonderland.”
A fellow justice in another case, Arthur Gilbert, had remarked that the statute “teeters on the brink of unintelligibility.”
In the case before Justice King, decided earlier this year, a landlord with 3,484 apartments was accused of violating the security deposit law by charging a $50 transfer fee for tenants who moved from one apartment to another within the complex, as well as a $65 premium for the first month’s rent.
Tenants testified that they were told the $65 fee was a cleaning fee, an administrative fee, a processing fee or a move-in fee. And no matter what you call it, the court concluded, it was an unlawful security deposit that could not be retained by the landlord.
The law in question, Section 1950.5 of the Civil Code, is a monster to read. Which is unfortunate because, as Justice King notes, it is probably one law that is read by many non-lawyers--tenants trying to figure out whether they will ever see their $300 deposit again, and landlords trying to decide in good faith whether they can keep it.
The section defines a security deposit in very broad language as “any payment, fee, deposit or charge, including but not limited to an advance payment of rent, used or to be used for any purpose,” and then lists specific purposes as examples, such as cleaning, failure to pay rent, damage to the property, but excluding “ordinary wear and tear.”
The law further requires that the landlord refund to the tenant any portion of such deposits “not reasonably necessary” for the purposes listed.
The law is open to wide interpretation. For example, another court concluded that charging more for the first month’s rent could be a security deposit in disguise. But rather than trying to decipher what judges can’t even seem to understand, let’s summarize the basic points in the law:
--The maximum amount of a security deposit is two months rent for an unfurnished unit, three months rent for a furnished unit.
--”Non-refundable” cleaning deposits are strictly prohibited. If a tenant leaves the premises absolutely clean, this deposit must be refunded.
--Security deposits must be refunded within two weeks after the rental ends. Landlords must send to the tenant by personal delivery or first-class mail a written, itemized statement of any deductions from the original deposit.
--A landlord who keeps the deposit, in bad faith or without reasonable cause, is subject to a $200 penalty in addition to actual losses. Suits can be brought in small claims court to recover the deposit and impose the penalty.
--A landlord may keep all or some of the deposit to cover unpaid rent or necessary cleaning and repairs, but not for ordinary wear and tear.
--And one final piece of non-legal advice for landlords and tenants--take “before” and “after” pictures of the rental unit so that you’ll have evidence to support your claims about needed repairs and cleaning.
The State Bar publishes a pamphlet entitled “What Should I Know Before I Rent?” Send your request for a free copy along with a self-addressed, business-size, stamped envelope to State Bar Pamphlets, 555 Franklin St., San Francisco, Calif. 94102.
