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How Much Should A Landlord Request As Security In California?




On July 1, 2024, a new law takes effect in California that caps security deposits at one month’s rent, regardless of whether a unit is furnished or unfurnished. Owners of no more than two rental properties, comprising no more than four units, can request up to two months’ rent.

 

So, if a landlord owns no more than four rental units, they may charge up to two months’ rent as security, but do they really want to do that?

 

Most apartments in San Diego County are currently renting for about $2,000 a month. So, if a landlord is allowed to, and requests up to two months’ rent as security, the tenant would entrust their landlord with $4,000 that, unless at the end of their tenancy the tenant owes rent, damages the unit beyond normal wear and tear, does not leave the unit in the same state of cleanliness they received it in, or the tenant agreed in the lease to restore, replace, or return personal property to the landlord and does not do that, the landlord must return the $4,000 security to the tenant within 21 days of the tenant vacating the unit.

 

Now, what could be the consequences for a landlord that inflates the cost to repair damages in the unit or outright lies about the condition the tenant left the unit in, resulting in the tenant filing a lawsuit against the landlord?

 

Well, depending on the judge who hears the case, if the tenant wins their lawsuit, the judge can award the tenant not only the amount the landlord unlawfully deducted from the tenant’s security deposit, but also two times the amount of that security.

 

Let’s look at an example:

 

Mary’s rent was $2,000 for a 2-bedroom, 1-bathroom unit, and the landlord required her to give two months’ rent as security, $4,000.

 

Mary resided in the unit for two years, always paying her rent on time.

 

At Mary’s Superbowl party, she dropped a huge vat of chili on the living room carpet. Splat! She tried to clean it, but the large, brown stain would not come up. Other than the chili stain on the carpet, Mary did not damage the unit and cleaned it before she moved out.

 

Seeing the large stain on the living room carpet, the landlord deducted $2,500 from Mary’s security deposit to replace the carpets in the unit.

 

Mary disagrees that all of the carpets in the unit had to be replaced because of one stain in the living room, and asks her landlord to return to her the $1,200 the landlord is withholding from her security to replace the carpets in the bedrooms. The landlord refuses.

 

Mary files a lawsuit against the landlord asking the Court to award her $1,200. Mary explains to the Court that the landlord should not have deducted $1,200 to re-carpet the bedrooms because she did not damage the carpet in the bedrooms and thus the landlord has unlawfully deducted $1,200 from her security deposit.

 

Mary wins because the judge says that while Mary damaged the carpet in the living room, she did not damage the carpet in the bedrooms, and the judge orders the landlord to return $1,200 of Mary’s security deposit and to pay Mary an additional $8,000.

 

The landlord is confused why the judge has awarded Mary $9,200 when she only asked for $1,200. The answer is Civil Code section 1950.5(l), that states a landlord who retains a tenant’s security in bad faith subjects the landlord to statutory damages of up to twice the amount of the security, in addition to actual damages. The Court can award bad faith damages whether the tenant requests them or not.

 

The judge in this example decided that the landlord knew Mary did not damage the carpets in the bedroom and thus should not have deducted from her security to replace them, therefore the judge decided the landlord acted in bad faith and doubled the amount of Mary’s security as a statutory damage against the landlord ($4,000 x 2 = $8,000) in addition to awarding Mary the $1,200 she requested.

 

Because the landlord chose to request two months’ rent as security and then did not properly administer Mary’s security deposit, the landlord exposed themself to greater liability. If the landlord had requested less in security, then the Court could not have awarded $8,000 in statutory damages. For example, if the landlord had just requested one month’s rent as security, then the judge could only have awarded a maximum of $4,000 as statutory damages.

 

So, how much should a landlord ask for security? That depends on a lot of factors, but a good rule of thumb is an amount allowed by law that the landlord would be comfortable losing if a Court ruled that the landlord must pay double that amount to the tenant.

 

 

 

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