Be Ready to Fork Over Large Deposits

ROBERT GRISWOLD | STEVEN R. KELLMAN | TED SMITH
05-Apr-1998 Sunday

This column on issues confronting renters and landlords is written by Certified Property Manager Robert Griswold, host of "Real Estate Today!" (KOGO Radio, AM 600, 1-2 p.m., Saturdays) and by attorneys Steven R. Kellman, director of the Tenants' Legal Center, and Ted Smith, principal in a law firm representing landlords.

Q: I have been renting a house in Pacific Beach for $950 per month since March 1997. When I moved in, I was charged the first and last month's rent plus a $300 deposit. The total cost to move in was $2,200. Can a landlord charge for a deposit and last month's rent?

A: Griswold: Yes. The first month's rent doesn't count as a deposit since it is due in advance under your rental agreement. The California law on security deposits allows the owner to charge a security deposit (very broadly defined to include security deposit, pet deposit, cleaning deposit, etc.) of up to two month's rent for an unfurnished unit and up to three times the rent for a furnished unit. Add an additional half month's rent if you have water-filled furniture, generally a water bed.

In your case, assuming the unit is unfurnished, a security deposit of $1,900 plus the first month's rent can be charged, for a total of $2,850.

Hope this clarifies your situation.

Q: We are from out of state and recently rented a town house and paid a $1,000 deposit to the owner. What is the California law on disposition of a renter's security deposit? Must it be deposited in an interest-bearing account until returned to the renter?

A: Smith: California law is quite clear on rental security deposits. The landlord has the right to keep the money, and it can be commingled with the rental owner's other cash.

California continues to debate whether its landlords should be required to pay interest on residential security deposits, but at this point, there is no law requiring landlords to pay interest on your deposit.

When you move, you will be entitled to the return of your $1,000, but nothing more.

From your deposit, the owner will have the right to deduct for three things: damages above ordinary wear and tear; reasonable cleaning expenses; and any unpaid rent you may owe to the date of your termination.

Kellman: Ted is right about the fundamentals of the deposit law. What he hasn't told you is that the deposit law is abused by some landlords who see this money as an additional source of income.

For example, if a landlord with a 200-unit complex keeps an additional $300 of the deposit from each unit per year, he gets $60,000 more per year over and above the rent!

Not bad.

Since there is no requirement to hold the money in a separate account, landlords can simply deposit the money into their own accounts.

Once done, it is hard to shake loose, with many landlords not wanting to part with the money that was held (or spent) by them.

Thus, we see many instances where landlords come up with all sorts of excuses to keep the money, making suspicious claims of damages and cleaning charges.

To protect yourself, do a thorough move-in inspection noting all defects in writing. Have your unit professionally cleaned upon move-out with receipts to prove the same.

IF YOU'RE A TENANT OR LANDLORD, the authors stand ready to answer your questions in this column, although letters cannot be answered individually. Write them at: Rental Roundtable, Homes Section, San Diego Union-Tribune, P.O. Box 191, San Diego, CA, 92112. Or you may e-mail them at rgriswold@retodayradio.com

Back to 1998 Rental Roundtable Index

Robert Griswold and the Real Estate Today! radio show strongly support the intent and the letter of all federal and state fair housing laws. As a reminder to all owners and managers of real estate, note that all real estate advertised is subject to the Federal Fair Housing Act, which makes it illegal to advertise "any preference, limitation, discrimination because of race, color, national origin or ancestry, religion, sex, physical disability, or familial status, or intention to make any such preference, limitation or discrimination." Additional state and/or local fair housing laws may also apply. Be sure to inform all persons that all dwellings offered or advertised are on an equal opportunity basis.

FHEO Logo

Revised and Updated - Wednesday, April 26, 2006

Robert S. Griswold, CRE, CPM, CCIM, PCAM, GRI, ARM
Griswold Corporate Center
Griswold Real Estate Management, Inc.
5703 Oberlin Drive, Suite 300
San Diego, CA 92121-1743
Phone: (858) 597-6100
Fax: (858) 597-6161
Email: rgriswold.ret@retodayradio.com