The dream of property investment can quickly unravel when faced with a damaged property by a careless tenant. Fortunately, there is much you can do as a landlord to protect your house and your money.
One standard step is using a security deposit at the start of each new tenancy.
This guide will explain everything you need to know about security deposits. We'll also explain the legal framework in California Bay Area. Plus, some best practices to help things remain stress-free.
What Are Security Deposits?
Security deposits in California refer to a fund collected by a landlord at the start of the tenancy. It's a safety net. They guard against potential damage to the property or other financial losses such as unpaid rent.
In Califonia, deposits are one or two months' rent. It ensures the tenant keeps to their agreement. If they don't, they can lose that deposit when they leave. In that respect, it acts as a financial incentive to the tenant.
Security Deposits and California's Laws
You must know specific California tenancy laws before you collect security deposits. State laws limit security deposits to two months' rent for an unfurnished property.
Another relevant aspect of the law is the rules about when you can deduct money from a deposit. First, a landlord must provide an itemized list of deductions.
Plus, they must return the remaining deposit to the tenant 21 days after they leave. Tenants can sue for the balance, plus punitive damages, if that money isn't returned on time.
Under California state laws, you cannot request a non-refundable deposit when leasing a property.
Common Security Deposit Disputes and Best Practices
The most common disputes about security deposits happen over deductions. The best way to avoid conflict is through effective communication. Talk to a tenant about an issue that arises and put the information in writing.
During a property review, use a checklist to make the information transparent and fair.
Conduct your inspection with the tenant present so you can point to problems. And offer photographic evidence of deductions as well as a written description. That will help protect you if the tenant disputes the problem.
Make sure you understand the difference between normal wear and tear and damage. For example, a worn carpet is a natural part of the wear and tear of a property. In contrast, a burn on the carpet would indicate property damage.
When managing a tenant's security deposit, store it in a separate bank account. That stops you from accidentally spending the money if it's sitting in your personal account. Provide a written receipt of the deposit to the tenant.
Finally, always stay within the law and return the deposit within 21 days.
Securing Your Property the Legal Way
Handing over the keys to your property to a new tenant can feel nerve-wracking. However, using the simple principles of a fair and transparent security deposit, you can help protect your money and property.
Contact our team for additional help in security deposits and other tenant matters. Our property management services might be the perfect option for you.