The Best Way to Handle Tenant Security Deposits as a Sonoma County Landlord

When you collect a security deposit from your tenant, it’s important to remember that while you’re the person holding the money; it belongs to the tenant until the end of the lease period. You cannot use those funds during the course of the tenancy.

California law is pretty specific when it comes to instructions on how much you can collect and when you have to return it. Make sure you stay compliant. Security deposit disputes usually do not end well for landlords.

Collecting the Security Deposit

When you’re renting out an unfurnished property, the maximum amount you can collect in a security deposit is the equivalent of two months of rent. So, if you’re renting out a home for $2,500 per month, your security deposit can be no more than $5,000. If you’re renting out a furnished home, the limit is raised to three times the monthly rent. So, a furnished home at that same rental value would allow a security deposit of up to $7,500.

Just because you can collect two times the monthly rent in a security deposit doesn’t mean you should. You want to collect enough that you’re feeling protected. If the tenant moves out and leaves behind property damage, you want to be able to pay for it. If they sneak out before the end of the lease term, that deposit can be used for unpaid rent. So, it should be substantial enough to cover your potential losses. But, you don’t want to chase away highly qualified tenants by requiring an absurdly high security deposit. Most landlords ask for the equivalent of one month’s rent.

Conduct a Thorough Move-In Inspection

The move-in inspection actually has a huge impact on the tenant’s security deposit and the way you handle its return. Your inspection needs to accurately and thoroughly document the condition of your Sonoma County rental property. It should include hundreds of pictures that reflect how every detail looks. Take pictures of the doors and the floors and even the ceilings and the inside of appliances. When tenants move out, you’ll use this inspection report to determine whether anything was damaged. It’s important that this inspection is thorough.

Returning the Security Deposit

Before your tenants move out, you’re required to offer them a pre-move out inspection. You’ll walk through the property with them and point out any issues that may result in their security deposit being charged. If they haven’t cleaned the property to the standards you’ve outlined in your lease agreement, let them know they’ll have to do that before they leave. Point out any areas that might result in a charge to the deposit. Perhaps an appliance isn’t working or the screens have been removed from the windows. Take your move-in inspection report with you so you can show them where there are problems.

You have 21 days from the date of the tenant’s move-out to return the security deposit. If you’re returning all of it, simply send the check to the forwarding address they’ve provided. If you’re withholding some or all of the deposit, you need to return whatever is left of it with an itemized list of the deductions you’ve made. The tenant is entitled to your explanation, and you should also include any invoices or receipts for work that was done to clean or repair the damage.

Returning the Security DepositBe careful with your tenant’s security deposit. You need to follow the law carefully. If you have any questions or need any help, please contact us at Healdsburg Property Management.