Landlord’s Guide to the Tenant Security Deposit Return Process by a Los Gatos Property Manager

The biggest controversy a landlord can have with a tenant is over the security deposit return after the end of tenancy.

Therefore, California law states procedures landlords must follow for refunding, using and accounting for tenant’s security deposit, as stated by the California Department of Consumer Affairs.

In order to avoid a sticky situation, Los Gatos property management company, Real Estate Connections, offers a few suggestions all landlords should incorporate before and after move-out.

First, all tenants are entitled to a preliminary inspection and if they request one then the landlord is required to give it to them. This gives the tenant an opportunity to know what needs fixing, cleaning, or painting so they can receive the full security deposit after move out.

Once the tenant moves out the landlord can do a final walk-through to see what they have done and how they did it. During this time the landlord can check to see if the property was well maintained and if the tenant listened to their recommendations and fixed or cleaned appropriately.

If your instructions were followed then that’s great because it requires less from you as the landlord. A few things you can always look at charging for are carpet cleaning and cleanliness of property.

These things, however, are determined based on how the property condition was prior to tenant possession. For example, if the carpets were not cleaned before the tenant moved in then it is not their responsibility to clean them after they’ve moved out.

According to the California Department of Consumer Affairs: The security deposit statute has the effect of limiting kinds of repairs or cleaning that the landlord or [property manager] agent may properly include in the itemized statement. Because of this statute, the landlord cannot, for example, use the tenant’s security deposit to repair damages or correct defects in the rental that existed when the tenant moved in or that are the result of ordinary wear and tear.

Since the term, “ordinary wear and tear” is pretty vague there are proper deductions that most landlords can make from the security deposit, including costs of cleaning, carpets and drapes, minor repainting, and damage to walls.

Generally, not all forms of damage to walls are considered a proper deduction in the eyes of the law. On the other hand, a large amount of holes in the walls that require filling with plaster and/or repainting can be deemed a justified withholding.

Remember that a paper trail is a landlord’s best insurance in any case, so make sure that whatever vendors are used you save the receipts. When you send your tenant an itemized statement for the services be sure to include all copies of receipts and any documentation.

Ultimately the most important thing a property owner should remember is to turn in the security deposit on time. The California law states, the landlord must send an itemized statement 21 calendar days or less after the tenant moves, along with a refund of any amount not deducted from the security deposit.

From Real Estate Connection’s experience the longer you wait the more risk you face if the issue was taken to small claims. If it does become an issue and the tenant takes you to court there is the possibility of not only returning the full security deposit, but paying double the original amount.

These guidelines are simple for all landlords to comply with and in the end will help prevent any future disagreements over the security deposit. If you are considering employing the services of the Professional Property Management company in Los Gatos, Real Estate Connections will be happy to hear from you.

 

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8 Responses to “Landlord’s Guide to the Tenant Security Deposit Return Process by a Los Gatos Property Manager”

  1. George Trombley May 24, 2013 10:07 am
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    It’s always good to have a process especially when dealing with security deposits. I have included a link to my Las Vegas Property Management blog. Let me know what you think.

    http://blog.blackbirdrealty.com/las-vegas-property-management-how-to-handling-the-security-deposit/

    George

  2. Chris Hermanski June 14, 2013 11:11 am
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    Security deposits are rarely and easy conversation and usually puts a Property Manager in a difficult situation. I have included a link to our blog on security deposits if you would like to compare practices.

    http://blog.mainlander.com/portland-property-inspections-determining-normal-wear-and-tear/

    Chris

  3. Keith Becker September 13, 2013 8:44 am
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    Excellent advise providing your tenant with an itemized statement including receipts and/or documentation for the services rendered to a vacated rental property. This informs the tenants of the cost of repairs and why they may or may not be receiving the security deposit they were expecting. In our blog, we discuss the advantages of a pre-move out inspection — the inspection lets tenants know what repairs/clean up are required in order for the property to be brought to acceptable conditions and how this in turn determines the amount of security deposit refund they get back. Here is a link:

    http://www.santarosapropertymanagement.com/2013/04/17/windsor-property-management-how-to-avoid-security-deposit-disputes/

    Hope you can find some handy information from this.

    Keith

  4. Deanna Hansen September 23, 2013 9:37 am
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    We like how you pointed out that in California, “the landlord must send an itemized statement 21 calendar days or less after the tenant moves, along with a refund of any amount not deducted from the security deposit.” — we think one of the things that might be easily overlooked is the “calendar days” vs. “business days” verbiage. One piece of information we like property managers to keep in mind when returning deposits is that, at move out, any clean up or maintenance like painting or carpet replacement costs must be prorated based on the amount of time the tenant lived in that property. One of our blogs hits some other sticking points on security deposits; here’s a link to our blog in case you’re interested: http://blog.aapexpm.com/security-deposit-procedures-hayward-property-manager/

    Deanna

  5. Jennifer Newton September 27, 2013 11:38 am
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    Refunding security deposits, as you mentioned, can be a point of contention. Helpful advice to tell property managers to do a preliminary inspection at move out which informs the tenant what needs fixing, cleaning, or painting in order for them to receive the full security deposit. We additionally suggest to have a thorough, written, detailed inspection before the tenant moves into the property. Take a look at our blog on the same topic:

    http://blog.waltershomemanagement.com/2012/06/15/how-to-deal-with-security-deposit-disputes-between-tenant-and-landlord-in-san-diego/

    Jennifer

  6. Kathleen Richards December 3, 2013 1:24 pm
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    How much to withhold on security deposits is certainly always a hotly contested issue between landlords and tenants so, as you suggested, be sure to keep all receipts for repairs to serve as a paper trail. Something different here in Santa Cruz is we have to pay annual interest on those deposits. Our blog, http://blog.portolarentals.com/payments-security-deposits-portola-property-management-works-owners/ provides more information on payments and security deposits.

    thanks,
    Kathleen

Trackbacks/Pingbacks

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