The following is what landlords sometimes don't understand regarding the security deposit refund process.
1) Taking too Long
California law states that landlords have a maximum of 21 days after the resident has vacated the property to refund the security deposit.
If this time frame is exceeded, the landlord forfeits any right to retain the resident's security deposit for any reason. They may be liable to pay the resident three times the security deposit amount.
2) Confusing Wear and Tear for Damage
California law distinguishes between wear and tear and damage, and it is important to note that there is a distinction between them.
While they may deduct the security deposit for resident-caused damages, they may NOT deduct the security deposit for items of wear and tear or property improvements.
Wear and tear refer to the natural deterioration of things as Time passes, whereas the resident's negligence causes damage.
If a landlord incorrectly charges for what could be legally defined as wear and tear, they may be responsible for paying the resident three times the incorrect charge or deduction.
3) Treating a Deposit as "Non-Refundable"
A deposit is, by legal definition, refundable. A landlord cannot have a non-refundable deposit; any funds defined as a "deposit" must be refunded to the tenant.
Therefore, it is important to recognize the difference between a non-refundable fee and a deposit, as any fee labeled "deposit" must be refundable.
4) Forgetting to Check the Final Utility Bill
All final utility bills should be considered when determining how much of the resident's security deposit may be withheld.
For example, in California, most utilities are billed in arrears, so the final bill is not issued until after the resident has moved out.
The landlord may need to contact the utility company for a final billing statement and ensure unpaid charges are properly charged to the resident's security deposit.
5) Over Charging for the landlord's Time
The time process of restoring a property to rent-ready condition after the previous residents have vacated may include items like repainting the walls, mowing the lawn, or making other minor repairs.
While landlords may charge the price of the materials used to repair tenant-caused damage, they may not charge exorbitant fees for the personal time invested in making these repairs.
6) Not Considering the Life Expectancy of an Item
Every item in a property has a different life expectancy, and California real estate investors and landlords must consider this when charging residents for replacing such items.
For example, most carpets have five to ten years of life expectancy.
If a carpet is five years old when a resident moves into the property and lives there for another five years, the carpet's life expectancy has been exceeded by the time the tenant moves out.
Consequently, landlords may not charge for damage to carpets regardless of their condition at move-out.
If the replacement of an item whose life expectancy has not been reached is required, a life expectancy formula should be used to determine the amount of deduction that should be made from the resident's security deposit.
DeChristopher Properties can help you with these and many other property Management questions. Call us today! 951-733-6896
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