A Guide to Coachella Valley Security Deposits | Palm Springs Property Management
Security deposits serve a specific purpose; to protect you as a rental property owner against the threat of unpaid rent, lease breaks, and property damage. You collect a security deposit in order to insure yourself against potential problems, but that money belongs to your tenants until you make a claim against it.
You’re required to collect, hold, and ultimately return a tenant’s security deposit. This can get complicated if you don’t understand the security deposit laws or if you have a tenant who is disputing your claims of damage.
We’re taking a look at everything you need to know about security deposits in Coachella Valley.
Security Deposit Limits in Palm Springs
Not every state limits what you can collect in a security deposit, but California is one of those states that does impose limits on security deposit amounts.
You’re allowed to ask tenants for a security deposit that’s up to the equivalent of two months’ rent when you’re leasing an unfurnished rental property. If you happen to be leasing a furnished rental property, you’re allowed to ask up to the equivalent of three months’ rent as a security deposit.
Here’s the simple math: a $3,000 per month rental property would require you to ask for a deposit that’s no more than $6,000, assuming that property is unfurnished.
It’s also important to note that your security deposit must be refundable. It’s illegal to collect a nonrefundable security deposit in California. Make sure your lease agreement reflects that the tenant can get the deposit back, and what steps are necessary for them to recover it.
Security Deposit Returns: What You Need to Know
Before a tenant moves out of your property, you’re required to offer them a pre-move out inspection. Not every tenant will agree to this, but it’s a good way to walk through the property together, you’re your resident, to assess the condition of the home and point out any potential security deposit deductions.
If you have the opportunity to conduct this inspection, you can get an idea of what kind of work you’ll need to do before renting the home to the next tenant. You’ll also get a general understanding of whether you’re going to refund all or most of the deposit.
Once the tenants have moved out of the property, you’ll need to go inside and conduct a full inspection of the empty home. Take photos so you can document any damage or potential charges to that security deposit.
This is where it’s critical to understand the difference between damage and wear and tear.
In California, security deposits can be charged for tenant damage, but any wear and tear issues are the responsibility of the landlord.
What does that mean?
- Wear and tear is the general deterioration that any property takes on during a residency. Small nail holes happen when pictures are hung. Carpets get worn in high traffic areas.
- Damage is different. It’s caused by tenants intentionally or accidentally. It’s the result of abuse, misuse, or neglect. Large holes in the walls, cabinet doors dangling from their hinges, and huge tears or stains in carpet could be considered damage.
If you’re not sure how to separate the damage from the general wear and tear, reach out to a Palm Springs property manager.
What You Can Deduct from a Security Deposit
To legally keep money from your tenant’s security deposit, you have to understand the reasons that a landlord might withhold money. In California, these are:
- Unpaid rent. If your tenant leaves without paying the last month of rent or if they only made partial payments the last few months before moving out, you can apply the security deposit to the rent that is owed and overdue. You can do the same if utilities have not been paid.
- Property damage. This cannot be wear and tear. You’ll have to have enough documentation to prove that your tenants damaged your property and should be held accountable.
- Cleaning fees. You can use the deposit to professionally clean the home before you re-rent it. But, you can only clean it to the same standard that the home was in when your tenants took possession.
Usually, the confusion is with wear and tear versus damage. With a solid move-in condition report and a good move-out condition report, you can compare how the property looked before the lease and after the lease. That will highlight the damage.
When to Return the Security Deposit
You have 21 days from the tenant’s move-out to return the security deposit and/or a disposition letter.
Send any remaining security deposit that is owed to them and if you made deductions, make sure there’s an itemized list of what you withheld and why. You’ll need to provide a full statement of your accounting that reflects what you paid to repair or replace damaged items. If you withheld the security deposit because of unpaid rent, make sure you include that accounting as well.
If you’re deducting for damage and you’re not able to make all the necessary repairs within those 21 days, you have to send a Good Faith Statement with an estimate of what those repairs will cost. This isn’t generally necessary, especially if you have a good team of vendors who can make quick repairs.
Security Deposit Disputes
What if there’s a dispute?
It’s easy to have a disagreement over what constitutes damage and what can be defined as wear and tear. When a tenant pushes back against what you’ve charged, you need to think carefully about how willing you are to fight for what you’ve kept. Can you prove that you’re right?
Most landlords are as eager as tenants to refund the full security deposit. This is why we push so hard for that pre-move out inspection. It’s why we’re so detailed in our accounting. When we can return a tenant’s full security deposit, it means that property is in excellent condition and we can get it back on the market faster. Everybody wins.
Let’s not worry about security deposit disputes. If you’d like some help collecting or returning a security deposit, contact us at Xepco Properties. We can be your best resource for Palm Springs property management and throughout Coachella Valley.
