When you own Marin rental property, you need to understand the why and how of security deposits. Security deposits are strictly regulated by state and local laws. It’s important for you to know these laws, otherwise you can get into trouble.
Property Management Marin: Security Deposit Limits
California Code of Procedures section 1950.5 states that you can collect a security deposit that equals two months of rental income. This deposit must be held and not owned. It is insurance if a tenant leaves without paying rent or damages your rental property in Marin. Per the Civil Code of Procedure, you can hold the money if lawful deductions are needed.
Property Management Marin: Lawful Deductions
Lawful deductions include a default in rent. If tenants leave and they don’t pay the last month’s rent, you can use the security deposit to pay any leftover rent. You can also use the money to repair damage beyond normal wear and tear. Excessive cleaning is another reason to use the security deposit. If your tenants leave an absolute mess and you need to clean excessively, you can use the money. If you need to replace personal property, that’s another reason to withhold money from the deposit. For example, maybe your tenants will take your shower head out and put their own in, but they’ll neglect to replace it.
Property Management Marin: Deadlines
There is a limited time for you to return the security deposit. By law, landlords have a 21-day timeframe to return that money. If you’re going to keep any or all of the deposit, you need to send an itemized list of deductions and things that need to be fixed. Once you make the repairs, there are 14 days to send your tenant whatever remains of the deposit.
Property Management Marin: Rent Value
The security deposit is tied to the rent value, so by law you can increase the security deposit when you increase the rent. So, you can use a 30-day notice of change of tenancy. This notifies the tenant that by law you are allowed, once you raise the rent, to increase the security deposit as well. Avoid the term “last month’s rent” because it suggests to tenants they don’t have to pay the last month after giving notice, and that’s not the case.
These helpful guidelines should assist you in navigating through security deposits in Marin, and if you have any questions about this topic or anything related to Marin property management, please contact us at Bayside Management.