Security Deposits and Renters' Rights

Landlords and property managers in Citrus Heights and most communities throughout the U.S. are legally allowed to require what’s called a security deposit or sometimes a damage deposit. This deposit is some amount of money that the landlord holds in the event that cleaning or repairs are required when the tenant moves out because the residence was damaged or excessively unclean. While landlords have these rights, tenants have rights as well, often referred to as renter deposit rights. Property owners, property managers, rental agencies and so forth must all act in accordance with these rights less they relinquish their own rights and be susceptible to fines and damages.

The Legal Matter of Security Deposits

Renter deposit rights vary from one state and jurisdiction to the next. There are also local ordinances and such to consider. The information here is provided as a guideline and presented based on California law. However, this article isn’t a legal document, and you shouldn’t rely on it to be current in such matters. Use it for a basic understanding and to provide context, but never take action until you’ve consulted the necessary lawyers, accountants and property managers in Citrus Heights.

A Renter’s Right to Security Deposit Interest

Most jurisdictions don’t dictate the type of account a landlord must use to store a security deposit. You could choose to place the deposit in an escrow account. Such accounts are generally non-interest bearing, and the landlord, therefore, has no responsibility to the tenant until move-out. This changes when a landlord stores the money in an interest-bearing account. By law, a security deposit is the property of the tenant, not the landlord. That means that the landlord must give all or some of that interest to the tenant each month. Landlords are generally allowed to charge an administrative fee, and they generally can choose to deduct the interest from any rent owed rather than make a payment.

A Renter’s Right to Ordinary Wear and Tear

Renter deposit rights include the right to ordinary wear and tear. Such laws are concise and use terms like ordinary, normal and typical to define what a tenant is allowed. This phrasing gives judges some room to make determinations on a case-by-case basis. In making determinations as a property management company in Citrus Heights property management, the two most important factors are the activity that created the wear and whether the worn material has an expected limited lifespan. Consider worn carpets in a high-traffic area. Walking back and forth through a home is normal behavior, and carpeted generally has an expected limited lifespan. If on the other hand, there are gouges in hardwood flooring, that isn’t created by normal activities and such floors are expected to last.

Other examples of ordinary wear and tear include:Worn hinges and locks
Small holes in walls
Faded or yellowing paint
Scuffed floors
Frayed pull strings on blinds

A Renter’s Right to a Move-Out Inspection

Many jurisdictions give a tenant a right to a move-out inspection. The tenant can request it, and some landlords offer it because it helps avoid disagreements later on. If required by law, a failure to comply with such a request relinquishes any right to the deposit. Even in jurisdictions where it’s not required by law, failure to comply can and often will weaken a landlord’s position in court. During such inspections, both the tenant and landlord can document the inspection and discuss any wear or damage. If there are disagreements, these can be negotiated here rather than in court.

A Renter’s Right to the Security Deposit

Most states and jurisdictions require landlords to fulfill their damage deposit requirements within 30 days. In California, a landlord has 21 days from the move-out day to provide the ex-tenant with the full security deposit. That 21-day requirement isn’t limited to business days and includes weekends and holidays. There can be extenuating circumstances, but in most cases, the landlord is required to pay interest on the security deposit for every day the money is held beyond the 21st. There may be other penalties as well depending on the jurisdiction.

In Lieu of a Full Deposit, a Renter’s Right to Information

In lieu of receiving a full deposit within the time frame established by law, the ex-tenant has a right to information about the withholding. As a landlord, you must inform the ex-tenant what you’re withholding as well as provide an itemized deduction sheet. Such documents must usually be delivered to the other party in a certified manner and within the same time limit. In other words, you have 21 days to provide the full deposit or to provide some or none of the deposit along with itemized reasoning for any and all deductions made. Although generally not required by law, many landlords will send move-in and move-out pictures that support their deductions in the hopes of avoiding legal action.

A Renter’s Right to Challenge a Landlord’s Decisions

As a landlord or property manager, you have the right to claim some or all of a security deposit, but your decision isn’t necessarily final, and the renter has a right to contest those decisions. One option tenants have is to file in small claims court for amounts up to $10,000 in California. They can sue for the security deposit, interest, penalties and court costs. If the judge deems you acted in bad faith, the penalty can be as much as twice the security deposit. Note that tenants can waive any amount to come in under the $10,000 limit. If they have a claim to more than $10,000 and choose not to waive it, then they have the right to pursue the lawsuit in superior court. In superior court, there’s an even greater burden on the landlord to prove that his or her deductions were reasonable.

Security Deposits and Renters’ Rights