Are you charging security deposits for new tenants? If not, you should be. Security deposits can protect you from paying for damages and unpaid rent yourself.
Landlords in Contra Costa, California, need to know a few things before accepting security deposits. The laws are about to change and it's important to stay compliant. Keep reading to learn more.
Changes to Security Deposit Limits
A new bill will change the limits on what California landlords can charge for security deposits. Previously, the security deposit amount could not exceed two months of rent.
With the new bill, landlords won't be able to charge more than one month of rent as a security deposit. This new law will go into place on July 1, 2024. Property managers can keep you up to date on new laws.
Small property owners with a total of only four rental units can still charge up to two months of rent as the maximum security deposit.
Collecting and Handling
Contra Costa, California landlords who collect deposits need to know how they must be handled. In California, the laws on collection and holding are more lenient.
Landlords don't have to provide a receipt to the tenant when they place the deposit in a bank account. However, landlords might find this a good practice to keep tenants in the loop.
Deposits don't have to be kept in a separate bank account or interest-bearing account. This means landlords are not obligated to pay security deposit interest.
Although not the law, it's beneficial to keep security deposits in a separate account. This will help keep your rental property accounting records organized.
Returning Security Deposits
Security deposits can help landlords with rental property protection. If the tenant causes property damage or fails to pay rent, the security deposit safeguards your cash flow.
If a tenant doesn't cause these issues, landlords must return the security deposit within 21 days from the end of the tenancy agreement.
If you withhold all or part of the deposit, you must provide tenants with an itemized list of the deductions and costs. Once repairs are made, provide the tenant with the exact list of expenses within 14 days of completion.
Legal Deductions
There are some maintenance and repairs that landlords are responsible for. While you cannot charge a tenant for regular wear and tear of the unit, you can make legal deductions because of:
- Unpaid rent
- Cleaning
- Damage exceeding normal wear and tear
To avoid a dispute with your tenant, make sure the possibility of these deductions is listed in the lease agreement.
Let a Property Manager Handle Security Deposits
A property manager can help landlords collect security deposits and make deductions if necessary. At PMI Easy Bay, we stay up to date with local regulations in Contra Costa, California.
In addition to handling security deposits, we can screen tenants, handle disputes, and coordinate maintenance. We'll run the day-to-day operations to keep you compliant.
We know that your property is an investment for the future and we will treat it as such.
For more than 20 years, PMI has made property management manageable! Contact us today to learn how we help landlords like you.
