Wouldn't it be great to have a magic wand to wave over your property after a tenant leaves? You could restore it to its original state and start marketing it again to the next tenant.
But without that fairytale answer, we need a more practical way of dealing with property damage. That's where security deposits come in. Read our short guide on rental deposit management tips in Menifee, California.
Maximum Security Deposits
As a landlord, you need to set security deposits within the legal guidelines. Those guidelines ensure tenants aren't overburdened with high property security costs.
In California, there is a maximum figure you can request from new tenants as a deposit.
The upper limit is two months' rent for unfurnished properties. However, if you provide a furnished rental, you can extend that security deposit to three months.
Allowable Deductions
It may be frustrating as a landlord to see wear and tear when a tenant returns a property to you. However, that doesn't necessarily mean you can deduct money from their deposit to cover the renovation costs.
You can only make deductions for fair and legal expenses, including unpaid rent, property administration, or a lease violation. However, that list does not typically include normal wear and tear issues.
Repaying Interest
In some states, you must repay any earned interest when you return a security deposit to a tenant. However, that rule doesn't apply in California.
This means it's a more straightforward process to calculate the money you return once a tenant's lease ends. The easiest way to manage this is to keep the deposit in a separate bank account from your standard one.
Property Inspections
Before you return a security deposit to a tenant, you'll need to check the property for damage or missing items. In California, you can request a walk-through inspection before the final date of the lease agreement.
That helps you spot issues that could mean a deposit deduction. It also allows tenants to resolve the problem before their tenancy ends.
Rental Property Guidelines on Returning a Security Deposit
By law, you have a deadline for returning a security deposit to a tenant after they move out. In California, that's 21 days.
This deadline should give you ample time to inspect the property and check whether you need to make deductions. But it's essential to adhere to these timescales.
If you don't stick to the deadline, the tenant can claim back their money without deductions.
Landlord Protections: Handling Tenant Disputes
The most important thing to remember about security deposits is that they must be fair. So, while they may be a tool for protecting your investment, they shouldn't cause unnecessary worry for tenants.
If there is a dispute, be upfront and transparent with the tenant and discuss your reasonings. If you can demonstrate fairness, it's the best way to resolve any conflict amicably.
Security Deposits: Protecting Your Investment
Remember, security deposits are there to protect your investment. However, you must be fair. And you must act within the law.
If you need help with deposits and other tenant support, you're in the right place. PMI Smarter Solutions is a family-run real estate business that will give you the personalized support you need in California. Find out more on our services page.
