California real estate has a lot of potential and you can generate a very good income from it, but you need to abide by the law at all times.
When you have any tenants move in, you'll collect a security deposit. It's important to understand the security deposit rules in Livermore, CA, to make sure you do things by the book. This will help prevent disputes and potential legal issues.
Let's go over some of the key things that you should know about security deposits in Livermore, CA.
Security Deposit Limits
California landlord laws have recently been updated with the new Assembly Bill 12 (AB 12). This dictates that landlords can only ask for a maximum of one month's rent for a tenant security deposit. This is for both furnished and unfurnished units.
It's important to note that there can be some exceptions here. Landlords who qualify as small property owners can ask for up to two months' rent for a deposit. This might include you if you own two properties or less, but you should double-check with a professional as other factors can affect your eligibility.
Collecting and Holding
As a California landlord, you're not legally required to provide receipts for deposits or pay interest on them. You also aren't required to keep deposits in a separate bank account. However, it's generally a good idea to do so as it will ensure they don't get mixed with other finances.
Returning Security Deposits
When a rental agreement ends, you must return a security deposit within 21 days. If you determine that you need to withhold part or all of the deposit, you need to create an itemized statement or written notice and give it to the tenant. This will give the reasons for any deductions as well as how much they cost.
You can deliver this by hand or send it via first-class mail. If the tenant hasn't given you a forwarding address, you must send the notice to the vacant rental property.
Landlords must notify tenants within 14 days of any repairs, cleaning, or restoration services. This should be done through an itemized statement of expenses.
You should also provide copies of any invoices for these expenses. However, you don't need to provide any of this if the tenant waives their right to get receipts or the repairs/deductions are under $125.
Allowable Deductibles
There are some specific reasons you may be able to make deductions from a tenant's security deposit. These typically include:
- Restorations
- Cleaning
- Unpaid rent
- Property damage (beyond normal wear and tear)
Make sure your lease agreement clearly states this information to avoid any confusion or disputes.
Dealing With Security Deposits
Security deposits are just one part of being a landlord, and with everything else, you might quickly find yourself being overwhelmed. A property manager can provide professional assistance to make sure every aspect of your property is handled properly and within the boundaries of the law.
PMI Alameda County is a full-service real estate asset management company serving Livermore, CA, and the surrounding communities. We have years of experience and use cutting-edge technology to provide industry-leading services to our clients.
Take a look at our property management page to find out more about what we do.
