5 Ways Your Landlord is Pocketing Your Security Deposit

As an individual consumer, you often find yourself signing “take it or leave” it contract terms where you give away a hidden fee or pay some additional cash deposit. You then later find yourself at the mercy of the company’s good faith and conscience in deciding how much you actually get back. When it comes to high-dollar “Rental Security Deposits,” Property Management Companies and Landlords can be among the greatest offenders.

Let’s see if this sounds familiar: Your landlord required you to pay hundreds (if not thousands) of dollars in cash up front as a non-negotiable condition of the lease. Just as they hand over the keys, you are rushed through a “Move-In Inspection,” guided by the property manager, of course. After you move out, no matter how many days you spend scrubbing the place, the same manager does her own walk-through, conjuring any discrepancy she can muster in the place. It doesn’t matter if the discrepancy or filth existed when you moved in or not. In fact, as a matter of course, many property management companies almost always include “general cleaning” “carpet cleaning,” or “painting.”

You are then kindly informed in a letter that they are going to go ahead and hang on to most – or all- of your deposit to compensate themselves for the numerous expenses they have incurred because of you. You get nonexistent proof, receipts, or specificity as to the damages or claimed filth. Then again, you have no pictures or documentation to prove otherwise. They may even charge you full price for brand-new painting or carpet that you stained. Either way, your cash is kept in their pocket.

Most of these tactics are not legitimate. But they already have your money. They’ve set up a system where they are their own inspector, judge, and jury.

You think you have no recourse or leverage.

But you do. The state of California actually has some helpful laws in place to protect tenants. Most tenants just don’t know it. Whether you are about to start the move-out process or you have already left, these little-known rules will put power back in your hands when it comes to recovering your Security Deposit.

First, make sure you take pictures when you move-in. A lot of pictures. Do not get rushed on your Move-In Checklist. Ask to keep it for 48 hours. Put it in writing if they deny you. Fill that thing out entirely and carefully. Get another set of eyes to help you. What you leave off will be fair game later.

If property management assures you that something will get fixed, get that in writing, and make sure you note it on your Move-In inspection.

On to the law:

1. Your Landlord Missed the 21-Day Requirement to Return Your Deposit

Within 21 calendar days from the day you move out, your landlord must either:

1. Return the entirety of your security deposit, OR;
2. Provide you with an itemized statement and receipts together with the balance of your original deposit minus the deductions within 21 days, per California Civil Code § 1950.5(g)(1).ⁱ
   21 days. If the property management company or landlord miss the 21-day deadline, even if some damages are legitimate, they forfeit the rights to keep ANY of your money.ⁱⁱ

What if the landlord says some of the claimed damages will take longer than 21 days to fix or clean? Doesn’t matter. Within 21 days, the landlord must still provide you with an itemized list of each and every expected charge and reasonable estimates for work that they have not completed, together with the leftover amount of your deposit.

What if you didn’t provide a forwarding address? Landlords often claim that they held the deposit for more than 21 days, because the tenant did not provide a forwarding address. NO. A lack of a forwarding address does not excuse them from the 21-day requirement. If the landlord does not have your current address, they must be able to prove they sent the accounting and money to the address you just vacated.ⁱⁱⁱ They may not just simply hold it.

2. Your Landlord Did Not Notify You in Writing of Your Option to Request an “Initial Inspection.”

Everyone knows about the Final Inspection where the charges rack up. But, in California, tenants have the right to be present at an “Initial Inspection” before the Final Inspection where the landlord lists, in writing, each and every charge they expect to attempt upon your move-out.^iv

But equally importantly, your landlord has the affirmative requirement to notify you in writing that you have the right to this Initial Inspection.^v Did this happen when you moved out? Likely not.

As long as you are not being evicted for certain specific reasons found in Cal. Civ. Code §1950.5(f)(1) or you didn’t explicitly waive your right to the initial inspection in writing, the landlord must notify you and perform an Initial Inspection.

You still retain this right even if you are terminating the tenancy early because of uninhabitable conditions under Civil Code Section 1941.1 or your landlord’s breach of the lease The Initial Inspection still must be offered and done within a “reasonable time.”

The landlord must attempt to schedule this Initial Inspection at when you are available. Unless you explicitly waive the right, you must receive 48 hours notice before the inspection.

So, before we even talk about the actual substantive requirements of the “Initial Inspection,” you may have potential recovery because your landlord never gave you written notice of your right to an Initial Inspection.

3. Your Landlord Did Not Give You an Itemized List or Opportunity to Remedy Claimed Expenses after Your Initial Inspection

Once the Initial Inspection is scheduled and completed, the landlord must give you an itemized list of what they think you should clean or repair.^vi

The landlord then must give you a reasonable time to do the repairs or cleaning itemized after the Initial Inspection, generally 2 weeks.^vii The Civil Code says it best: “The purpose of the initial inspection shall be to allow the tenant an opportunity to remedy identified deficiencies, in a manner consistent with the rights and obligations of the parties under the rental agreement, in order to avoid deductions from the security.”^viii

1. The itemized list is advantageous for several reasons:
2. It provides you with a checklist, allowing you to focus your cleaning and repair efforts properly;
3. The two-week window between Initial Inspection and Final Inspection gives you time to research whether the claimed items are expenses that may properly be deducted from your deposit (see below);
4. The list locks the landlord in on what they may later try to claim;^ix
5. The Initial Inspection allows you to properly document, take photos, and preserve evidence in the listed areas, showing the state of the property the day the landlord or property manager did his or her walkthrough and the day you moved out.

If you are denied these rights, the landlord must refund your deposit.

4. The Landlord is Charging You for Prohibited Expenses.

So, how do you know what expenses and deductions your landlord may claim? Well, for one, the landlord is required to give you an actual copy of the California Civil Code sections regarding security deposits when he gave you your itemized statement after that Initial Inspection. Yes, that is yet another often-missed requirement.^x

California law specifically allows the landlord to use a tenant’s security deposit for four purposes:

1. To clean the unit only to the same level of cleanliness (or lack thereof) that it was when you moved in.
2. To repair of damages beyond “normal wear and tear.”
3. The Cost of replacing property you may have lost or destroyed, such as keys or furniture.
4. Unpaid rent.^xi

So, if you moved in, and an air vent was full of dust, you may leave with it in that same condition. If you moved in, and the shower had scum or soap build-up, you can leave it that way. Same goes for stains on a carpet, damage to walls or floorboards, grease in a stove, or any other often-claimed cleaning discrepancy. The landlord does not get a free cleaning or unit upgrade from your tenancy.

Again, pictures and a meticulously-completed Move-In checklist are helpful to refute the landlord’s claims that you left something dirtier or more damaged than when you moved in.

Make them be specific

Even if you don’t have your own pictures or evidence, the landlord must still prove specifically what they are attempting to claim you damaged or left filthier than when you moved in. The landlord says the whole unit was “dirty” when you moved out? So what. Cleaning expenses because you “left the whole place filthy,” as they often say, doesn’t cut it. Don’t fall for it. The question is, which parts specifically do they claim and show were dirtier or more damaged than when you moved in.^xii

One common bogus charge included on your invoice is “general cleaning.” This usually means that had Merry Maids come do a top-to-bottom deep cleaning to show the apartment on your dime. Not ok. The landlord does not get an extreme unit makeover because you cracked a tile in the bathroom.

“Bathroom dirty,” “Scratched furniture,” “Damage to stove” are all examples of nonspecific, general landlord claims, typically because they do not have any proof of an actual discrepancy. Yet, tenants let them get away with it.

The landlord must itemize exactly what was damaged or dirtier than the day you moved in and charge you only as much as it will reasonably cost to put that specific condition back to where it was, which is not always necessarily “new” condition.^xiii

“Normal wear and tear”?

Now, let’s say the landlord can demonstrate that a specific thing is in a worse condition than it was at the beginning of your tenancy. Is that the end? No, you then determine if the claimed discrepancy is this just ‘normal wear and tear.’

Carpet normally gets worn down and acquires little spots. Paint fades and gets scuffed. Floorboards get scratched. This is “normal wear and tear.”^xiv

In fact, landlords and property managers get tax write-offs for this type of “depreciation” in property, appliances, and components related to the rental of residential units. It’s not your job to fund their upgrades.

Consider the (almost) always-included “Carpet cleaning” charge. Many times you are told this is just part of the normal moving-out charges. No way. In any 5, 2, even 1-year tenancy, the carpet will undoubtedly pick up some dirt, some dinginess, and some minor “spotting. ” It will undoubtedly get “worn” in main walkways or under furniture, no matter how careful or conscientious you are. That’s “normal wear and tear.” That’s the price of poker for an investment property owner. Unless you leave damage like larger, permanent stains, pet damage, or rips, don’t stand for it.

For walls, it’s normal to have a few small holes where you hung pictures, scuff marks, fading, or nicks. You cannot be charged for “normal wear and tear.” The question is whether you left large or many holes, gouges, or abnormal damage that is outside the ordinary.

As another example, let’s say the steam from your shower has caused paint in the bathroom to peel. Is that on you? No, that is “normal wear and tear” that would happen with anyone in the unit, using the bathroom in a reasonably expected manner. They should have used different paint or had better ventilation systems in the bathroom. Even though the bathroom is in worse condition than when you moved in, the damage or discrepancy is not your responsibility based upon those circumstances.

Don’t forget to Depreciate

And if you did leave abnormal, permanent damage, you are not on the hook for brand new carpet installation. First, the landlord must prove to you that they are taking the reasonable and necessary steps.^xv Most of the time, this is just the cost of professional cleaning or professional stain remover, not full replacement. But, if your dog did tear the whole living room apart, you are not still paying full-price for brand new carpet. Remember depreciation.

Going back to the carpet example, the landlord may only charge you for whatever “life” was left in that carpet. Let’s say, for example, they had this carpet for 9 years and it was “10-year” carpet. You may only be charged 1/10 of what it costs to replace the carpet, because the carpet only had 1/10 of its value remaining anyway.

When talking carpet, paint (2-year life in California), furniture, you need to demand that they show you when that property was purchased and installed. And you need to pro-rate whatever life was left, even if you were responsible for some permanent damage.

5. The Landlord Has Not Provided You with Proof of Their Claims.

California Civil Code §1950.5(g)(2) further says, “Along with the itemized statement, the landlord shall also include copies of documents showing charges incurred and deducted by the landlord to repair or clean the premises…”

The “documents” should include the hourly rate, specific work performed, hours spent, and documentation of expense invoices, bill, or receipt. If the landlord does not do the work himself, he must provide a copy of the itemized bill, invoice, or receipt supplied by the person or entity performing the work.^xvi If the landlord, property manager, or employee actually did the work, then you still must get an itemized statement specifically describing the work done, the hours spent, and the hourly rate they are claiming.^xvii The landlord must prove that the hourly rate, time spent, and work done was all “reasonable.”^xviii

The landlord will often send you a line-item charge for materials used. Make sure the cost is reasonably tailored to just the materials needed for you job. If it is something the landlord purchases regularly in bulk (caulk, cleaning solution, etc), they must show the invoice, receipt, or vendor price list that will parse out the actual cost of your job’s material.^xix

The landlord may make a “good-faith estimate” of charges in the itemized statement if the repair is being done personally by the landlord or an employee and “cannot reasonably be completed within the 21 calendar days,” OR another business or contractor is involved, and the landlord does not have the invoice or receipt within the 21 days. In this case, the landlord still must include the name, address, and telephone number of the business that is doing the job. The “good faith estimate” may be deducted from your deposit within the 21 days requirement. However, within 14 calendar days after completing the repairs or receiving final documentation, the landlord must deliver to you an updated itemizes statement, with final receipts, and any refund of previous overcharges on the good faith estimates.^xx

If the landlord cannot/does not give you receipts or documentation for reasonable work on specifically-charged, legitimate defects, then the landlord may not make those deductions.

What Do I do About It?

In the likely case that your landlord violated the California security deposit statutes in your case, what do you do? First, use this information to bring the illegitimate charges to your landlord or property manager’s attention and document it. Either email or send a letter demanding back the amount you have calculated. Send via certified mail with a return receipt in case you have to prove it later. Sometimes a letter showing you know the law and are serious about pursuing your claim will be met with cooperation from one of these companies. Knowledge is power.

However, be smart and unemotional. It’s often wise to have an attorney or advisor ensure that your communications are thorough, legally accurate, and not missing any causes of action. This letter will be used in any later action in court.

If the landlord or management company chooses to ignore you or plays unfairly, Small Claims Court in California handles security deposit disputes. If the landlord is dealing with you in “bad faith,” you may be able to recover, not just the full amount of your deposit, but an additional 2x your deposit in penalties. You may also have additional contract damages, costs, and interest. The limit for this type of action in Small Claims Court is fairly significant- $10,000.

While lawyers are not allowed to appear on your behalf in California Small Claims Court, an attorney can help you put your case together, negotiate with the landlord, or help file in Small Claims court. Aaron Meyer Law always stands ready to help tenants in California. The Courts themselves also have “Small Claims Advisors” to help you file. The Department of Consumer Affairs also provides very helpful material. The point is: Do not be intimidated by the system. If any amount of your security deposit is being illegally withheld, use the law, stand up, and fight for what is fair.

[i] “No later than 21 calendar days after the tenant has vacated the premises, but not earlier than the time that either the landlord or the tenant provides a notice to terminate the tenancy under Section 1946 or 1946.1, Section 1161 of the Code of Civil Procedure, or not earlier than 60 calendar days prior to the expiration of a fixed-term lease, the landlord shall furnish the tenant, by personal delivery or by first-class mail, postage prepaid, a copy of an itemized statement indicating the basis for, and the amount of, any security received and the disposition of the security, and shall return any remaining portion of the security to the tenant.”

[ii] Granberry v. Islay Investments (1995) 9 Cal.4th 738, 745 [38 Cal.Rptr.2d 650, 65][iii] “Any mailings to the tenant pursuant to this subdivision shall be sent to the address provided by the tenant. If the tenant does not provide an address, mailings pursuant to this subdivision shall be sent to the unit that has been vacated.” Cal. Civil Code §1950.5(g)

[iv] California Civil Code §1950.5 (f) (1) provides, “Within a reasonable time after notification of either party’s intention to terminate the tenancy, or before the end of the lease term, the landlord shall notify the tenant in writing of his or her option to request an initial inspection and of his or her right to be present at the inspection…”

[v] Id.

[vi] California Civil Code §1950.5(f)(2).

[vii] California Civil Code §1950.5 (f)(1)

[viii] Id.

[ix] Does this mean that you can then destroy the place? No, you are still rightfully liable for any damages you cause after the Initial Inspection or damages or defects that your possessions kept the landlord from seeing on initial inspection. However, deductions still must be proven, and the initial inspection document is good evidence to the contrary. Another time that pictures and witnesses are important.

[x] California Civil Code Section 1950.5(f)(2), referring to Civil Code Sections 1950.5(b)(1)-(4) where the permissible expenses are listed.

[xi]California Civil Code Section 1950.5(b),(e)

[xii] California Civil Code Section 1950.5(b),(e)

[xiii] California Civil Code Section 1950.5(b)(3)

[xiv] California Civil Code Section 1950.5(b),(e)

[xv] California Civil Code §1950.5(l).

[xvi] California Civil Code §1950.5(g)(2)(B)

[xvii] California Civil Code §1950.5(g)(2)(A)

[xviii] California Civil Code § 1950.5(e)

[xix] California Civil Code §1950.5(g)(2)(C)

[xx] Id.