Under current California law, landlords are allowed to collect a security deposit of up to two months' rent for unfurnished rental properties. If the rental property is furnished, landlords can charge a security deposit of up to three months' rent.

However, from July 1, 2024, onwards, the maximum security deposit landlords can charge, regardless of whether the property is furnished or unfurnished, will be capped at one month's rent.

There are exceptions to this new rule. If the landlord is an individual or a member of a limited liability company (LLC) who owns no more than two residential rental properties (not exceeding a total of four units for rent), they are permitted to request a security deposit of up to two months' rent.

Additionally, for tenants who are service members, the security deposit cannot exceed one month's rent under any circumstances.

Landlords must carefully consider these new regulations when setting security deposit amounts to ensure compliance. Understanding these changes is crucial for a smooth transition and to avoid legal complications. Both landlords and tenants should prepare accordingly as these new rules come into effect on July 1, 2024.

The setting of a security deposit is designed to protect the landlord's interests. For example, if a tenant fails to pay rent, leaves unpaid utility bills, damages the property or landlord-provided furniture, or requires cleaning after moving out, the landlord can use the security deposit to cover these costs. However, the deposit cannot be used for repairs of damages that fall under normal wear and tear or any damages that existed before the tenant moved in.

Disagreements between landlords and tenants over repairs can often lead to disputes. To avoid such situations, I ensure to conduct three inspections when managing properties for landlords, safeguarding both the tenant's and the landlord's interests.

The first inspection takes place before the tenant moves in. As the property manager, acting on behalf of the landlord, I conduct this detailed inspection together with the tenant. The inspection covers fourteen major categories and 125 specific items. Each of these 125 items is carefully examined with the tenant, and any issues are noted down in writing. We also take multiple photographs from various angles to document the condition of the property thoroughly. The aim is to provide a comprehensive record of the property's state before the tenant moves in.

The kitchen and bathroom are areas of particular focus during this inspection. For instance, the kitchen inspection includes checking 14 items: the floor, walls, electrical outlets, ceiling, windows, window locks, screens, sink, and all kitchen appliances, among others. After the inspection, both parties sign off on the inspection report, indicating mutual agreement on the property's condition.

This meticulous process ensures that there is a clear and detailed record of the property's state at move-in, protecting both the landlord's and tenant's interests.

The second inspection occurs two weeks before the tenant moves out. This inspection covers the same content as the move-in inspection. The purpose of this inspection is to give the tenant an opportunity to make any necessary repairs themselves.

If any tenant-caused damages are identified during this inspection, the tenant has the chance to repair these issues before moving out. This approach fosters a more harmonious relationship between the tenant and the landlord, as it can save the landlord the time and effort required to make the repairs. Additionally, it helps protect the tenant's security deposit, as there will be fewer deductions for repairs.

The third inspection takes place after the tenant has moved out. During this inspection, we again go through all fourteen major categories and 125 specific items, checking each one and taking photographs. We then compare these photos with those taken before the tenant moved in to assess any wear and tear or damage. This comparison helps determine whether the wear and tear falls within a reasonable range and if there are any damages that need repair.

If repairs are needed, the law requires landlords to send tenants an itemized statement within 21 days of moving out. This statement must detail each repair cost. If the landlord performs the repairs, the statement must include a description of the work completed, the time spent, and the hourly rate charged. If someone else performs the work, the landlord must provide a copy of the invoice for that work. If repairs cannot be completed within 21 days, the statement must include a reasonable cost estimate. Any remaining deposit must be returned within 14 days of completing the repairs.

Lastly, I'd like to remind all landlords that the security deposit must be returned within 21 days after the tenant moves out. Failing to do so can result in a penalty of twice the amount of the security deposit. Additionally, landlords in Berkeley, Los Angeles, Santa Cruz, and San Francisco are required to pay interest on the security deposit when returning it.

Being a landlord is indeed challenging, but I can help make it easier for you.