2024 Security Deposit Rules

A former tenant is suing me for his security deposit refund. Is there anything I can do to prepare for this hearing besides documenting the damage?

This question warrants a brief review of the security deposit rules and the processes required when residents vacate.  Beginning July 1, 2024, most housing providers may only request one month’s rent as a deposit, regardless of whether the residence comes furnished or unfurnished.  In San Francisco, all residential security deposits except those collected for tenancies where the rent is assisted or subsidized by any government unit, agency, or authority earn annual interest that must be paid yearly after the first year of the tenancy at a rate that is determined by the Rent Board effective March 1 of every year.

Tenants must usually be given the right to have a pre-moveout inspection.  When you receive or issue a notice terminating the tenancy, except when the tenancy is being terminated for a tenant fault ground such as nonpayment of rent or nuisance, the following should be transmitted to the departing residents in writing as required by California Civil Code Section 1950.5:

“You have the option to request an initial inspection with the property manager before you vacate, and you have the right to be present at this inspection. The purpose of this inspection is to allow you an opportunity to remedy identified deficiencies in order to avoid deductions from the security deposit.  If requested by you, the property manager shall make an initial inspection at a reasonable time, but no earlier than two weeks before the termination of the tenancy.  If you request an inspection, the parties shall attempt to schedule the inspection at a mutually agreeable date and time.  If a mutual time is agreed upon for the inspection, the manager shall give at least 48 hours prior written notice to you of the date and time of the inspection.  If a mutually agreeable time cannot be scheduled, the manager must give at least 48 hours’ written notice to you of the date and time for the inspection.  You need not be present during the time of the inspection.  You and the manager may agree to forgo the 48-hour prior notice by both signing a written waiver.  The manager shall proceed with the inspection whether you are present or not unless you withdraw your request for the inspection.  Based on the inspection, the manager must give you an itemized statement specifying repairs or cleaning that are proposed to be the basis of any legally permissible deduction from the security deposit.  The itemized statement must include the actual text of specified sections of the security deposit law.  The statement must be provided to you if you are present for the inspection or must be left by the manager inside the home if you are not present.  You shall then have the opportunity during the period following the initial inspection until termination of the tenancy to remedy identified deficiencies, in a manner consistent with the rental agreement, in order to avoid deductions from the security deposit.  The housing provider has the right to use the security deposit for deductions itemized in the statement that are not corrected by you, so long as the deductions are allowed by law.  The manager is allowed to use the security deposit for (1) the default in the payment of rent; (2) the repair of damage to the apartment, exclusive of ordinary wear and tear, caused by you or your guests; (3) the cleaning of the apartment in order to bring this housing to the same level of cleanliness it was in at the inception of the tenancy; (4) the failure of you to restore, replace or return personal property or appurtenances; (5) damage to the apartment that occurred between completion of the initial inspection and termination of the tenancy; and (6) damage to the apartment that was not identified by the manager during the initial inspection due to the presence of your possessions.”

The deposit must then be returned, minus allowable deductions that are properly documented, within 21 days after the resident leaves unless the actual costs for repairs cannot be ascertained within that time, in which case a good faith estimate shall be provided with a final assessment to follow once the costs are fixed.  Receipts and bills must accompany the disposition communication should the amount deducted exceed $125.

Hopefully, your former resident was given the right to have a pre-moveout inspection, you documented the apartment damage during this inspection, and then the repair costs incurred were communicated within 21 days after departure.  If so, present this information to the small claims judge who will decide whether these deductions were reasonable and whether you substantially complied with Section 1950.5.

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