Rent Stabilization Board
Rent Stabilization Board

The Berkeley Rent Board Mailbag

Security Deposit

Question and Answer page regarding security deposit interest rates (October 2008).


Q: I am moving out of my apartment and I want to know if I need to pay last month's rent. When I moved in, I paid $1000 security deposit, $1000 last month's rent, and $1000 first month's rent. I recently gave my 30 day notice, and my landlord said I needed to pay last month's rent. When I told him I paid it when I moved in, he said it was part of the security deposit and he did not have to let me use it toward last month's rent. If this is so, why differentiate between last month's rent and security deposit? (August 2002, updated June 2008)

If your lease agreement or canceled check clearly identifies a payment as last month’s rent, your landlord is required to honor this agreement.  While a last month’s rent payment accrues interest that the landlord is required to pay each year (see Regulations 701 - 706), it is separate from the rest of your deposit in that it is specifically earmarked for payment towards your last month of rent in the rental unit.  Nevertheless, you may have to make up the difference in rent if your rent has increased at all during the course of your tenancy.  For example, if you moved into the unit at a rent of $1,000 and your rent has increased during your tenancy to $1,050, you will have to pay $50 to make up the difference in rent.


Q:  Can I charge an extra deposit for pets?  (November 2006)

Generally a landlord can only establish the security deposit amount at the beginning of a tenancy, and this amount cannot be increased.  However last year the Rent Board passed Regulation 705.  Under this regulation, a tenant and landlord may mutually agree in writing to collect an additional deposit for the acquisition of a pet if the rental agreement does not already allow for one.  Remember, however, that under state law, the overall amount of the deposit (which includes the last month's rent payment if one was collected at the inception of the tenancy) cannot exceed two month's rent.  


Q:  I rented out one of my apartments to four students two years ago. Their tenancy ended last month, and after they moved out the apartment was in pretty bad shape: The carpets were covered with stains, the stove burners were so encrusted with grime that they are not functioning correctly, and there was a large hole in one of the bedroom walls. I plan on having the damage repaired and taking any money I use out of their security deposit. How should I go about this?  (May 2006)

It sounds like the damage left by the tenants goes beyond the normal "wear and tear" that a landlord expects to see during the course of a two-year tenancy. For this reason, you can hold the tenants responsible for the repairs, as long as you go about it the right way: First, get the damage fixed as soon as possible, and keep all invoices and receipts for work performed. Second, return the tenants' security deposit-minus any money you used to make repairs-to them within three weeks of their move-out date. Finally, if the money you spent making repairs exceeds $125, you must include an itemized list of repairs made to the unit, along with copies of the receipts and invoices for work done.


Q: I am about to sign a lease for an apartment, but I have a question about the security deposit. The rent is $1000, and the landlord is asking for first and last month's rent and a security deposit of $1500. Do I really have to pay $3500 up front?  (May 2004)

California Civil Code section 1950.5 limits the amount a landlord may legally "demand or receive" as a security deposit to no more than twice the rent for an unfurnished apartment or three times the rent for a furnished one. The security deposit includes all the money collected at the beginning of the tenancy except the first month's rent; in this case, the security deposit includes the $1500 plus the $1000 that has been designated as "last month's rent." (Pet or cleaning deposits are also considered part of the security deposit). Thus, you are being asked to pay two and a half times the rent, which exceeds the lawful maximum for an unfurnished apartment.

You have a number of options in dealing with the issue at hand. Your landlord may not be aware that there is a law limiting deposits, and if you point it out to him or her, the landlord may reduce the deposit amount to a lawful level. On the other hand, he or she may be unsure and still want you to pay the original amount requested. If you believe you may risk losing the apartment altogether by not paying the extra $500, you may not want to raise the issue until after you have signed an agreement. In any case, if you do end up paying over the lawful amount, you can file a petition with our office to get it back. Please call us for advice on how to proceed in this situation.


Q: My tenant has given notice verbally that she will be moving out at the end of May. I read that there are new laws about security deposits. Is there anything I need to do in anticipation of her departure?  (April 2004)

First, you should ask for the notice in writing to reduce the possibility of confusion later on about when she said she would move out. Also, you need to give her written notice of her right to a pre-move-out inspection to take place during the last two weeks of her tenancy at your mutual convenience. The purpose of this inspection is to provide a written itemization of the repairs or cleaning that will give rise to deductions from her deposit and give her the opportunity to remedy these deficiencies and avoid the deductions. Once she vacates, you have 21 days to return the deposit with an itemized list of any deductions. If deductions exceed $125, you need to attach the receipts or invoices for these items. For more information, you can refer to the state law about security deposits, California Civil Code section 1950.5.


Q: My tenant moved out and I need some advice about security deposit deductions. When we did our initial walk through, I told her what was needed to return the unit to its initial condition, less what I considered "normal wear and tear." Specifically, I said that the unit needed to be cleaned thoroughly, the refrigerator defrosted, and two of the rooms repainted. Now that she has moved out, I see it was not sufficiently cleaned, and the walls have been spackled, but they still need repainting. Can I deduct the full cost of a cleaning person and a painter? (October 2003)

It depends. CA Civil Code section 1950.5, which governs security deposit deductions, is not that specific. Regarding cleaning, the tenant must return the unit to the state of cleanliness at the beginning of the tenancy. If you had it professionally cleaned before the tenant moved in, and she did not return it in that condition, then you can likely charge her. However, if there are only a few things that do not meet that standard, say, the refrigerator wasn't defrosted and the kitchen floor wasn't mopped, then charging her the full cost of a cleaning person is probably not warranted. You should just deduct the cost for a person to clean those things.

Whether or not you can charge for painting depends largely on when the two rooms were last painted. A paint job has a certain life, which can vary depending on such factors as the quality of the paint, the length of the tenancies, the number of tenants, etc. The CA Landlord's Law Book, Vol I., by NOLO Press, 2001, assumes a two-year life for paint, which would mean that a tenant who lived in a unit for two or more years could not be charged for repainting. You might think an interior paint job has a useful life longer than two years, in which case you should determine what a reasonable useful life would be. If you think a paint job should last five years and the tenant was in the unit for two years, you could charge her 3/5 of the cost of repainting the two rooms because the paint job should have lasted another three years. This is the principle you should apply to anything that needs replacing: you can only charge for the remaining useful life of the item.


Q: I gave my 30-day notice to move out on August 5th, but I moved out on August 10th. I understand that the landlord has 21 days to return my deposit, but is that from the day I move out, or the end of the 30 day notice period? Should I expect my deposit by August 31st or September 25th? (September 2003)

California Civil Code Section 1950.5 (g) states that the landlord shall return the deposit, along with an itemized statement of deductions, "within 3 weeks after the tenant has vacated the premises." Therefore, provided the landlord was aware that you vacated the unit on August 10th, the security deposit must be returned by August 31st. Of course, the landlord is entitled to rent through September 4th. For this reason, if you have not paid rent through the 4th, your landlord may deduct the unpaid rent from your security deposit before refunding the balance of the deposit. Finally, if the unit is re-rented prior to September 4th, and the landlord has deducted rent through the 4th from your deposit, you are entitled to a rent refund for the days during which it was re-rented.


Q: I moved out of my apartment a month ago and am having trouble getting my security deposit back. I called the landlord, and he said that since my roommate is still there, he did not have to return my deposit. Do I have to wait until my former roommate moves out before I can get my deposit back? (August 2003)

No. While it's true that your landlord does not have to return any of the deposit on the apartment until it is vacated, you should get your share of the deposit back from your former roommate, or from a new person taking your place, if there is one. If there is a new tenant, and s/he pays the landlord a security deposit, then you would get your share back from the landlord. If there is no new person or the new person pays your roommate, or does not pay a deposit, your only recourse is to get it from your old roommate. If s/he won't give it to you, you may need to take him/her to small claims court.


Q: Yesterday I performed a walk-through inspection as required by law (CA Civil Code 1950.5). I was sad to see the state in which the tenants were leaving the unit--the carpets were filthy, some window blinds were broken, there were numerous holes in the walls from pictures and tape marks from posters, the wood floor in the living room was scratched from desk chairs, and the linoleum in the bathroom was coming up. I identified these items for deduction and plan to get estimates, but the tenants are already saying they will dispute the deductions because these constitute "normal wear and tear." Are they? (July 2003)

Unfortunately the laws are vague, and if the parties cannot resolve their disputes themselves, a judge in small claims court may have to decide. The most practical guidelines we have seen about security deposit deductions can be found in the Department of Consumer Affairs' California Tenants publication (updated 2001, reprinted 2002). The free publication, which contains additional information about landlord/tenant laws, is available at www.dca.ca.gov or you can request a copy from the DCA, P.O. Box 989004, West Sacramento, CA 95798-0004. Below is an excerpt from the publication: 

Suggested Approaches to Security Deposit Deductions
Unfortunately, the law's terms "reasonably necessary" and "normal wear and tear" are vague and mean different things to different people. The following suggestions are offered as practical guides for dealing with security deposit issues; while these suggestions are consistent with the law, they are not necessarily the law in this area. 
1. Costs of cleaning. A landlord may properly deduct from the departing tenant's security deposit to pay for cleaning that is necessary to satisfy the "average" or "reasonable" incoming tenant. A reasonable standard, which may not work in every case, is whether the departing tenant left the rental unit as clean as it was when he or she moved in. 
A landlord cannot automatically charge each tenant for cleaning carpets, drapes, walls, or windows in order to prepare the rental unit for the next tenancy. Instead, the landlord must look at how well the departing tenant cleaned the rental unit, and may charge cleaning costs only if the rental unit (or a portion of it) was left in a clearly substandard condition. Reasonable cleaning costs would include the cost of such things as eliminating flea infestations left by the tenant's animals, cleaning the oven, removing decals from walls, removing mildew in bathrooms, and defrosting the refrigerator. 
The landlord is allowed to deduct only the reasonable cost of cleaning the rental unit from the tenant's security deposit. One practical measure of the cost of cleaning is the going hourly rate for cleaning costs in the area where the rental unit is located. 
2. Carpets and drapes - "useful life" rule. Normal wear and tear to carpets or drapes cannot be charged against a tenant's security deposit. Normal wear and tear includes simple wearing down of carpet and drapes because of normal use or aging, and includes moderate dirt or spotting. In contrast, large rips or indelible stains justify a deduction from the tenant's security deposit for repairing or replacing the carpet or drapes. 

One common method of calculating the deduction for replacement prorates the total cost of replacement so that the tenant pays only for the remaining useful life of the item that the tenant has damaged or destroyed. For example, suppose a tenant has damaged beyond repair an eight-year-old carpet that had a life expectancy of ten years, and that a replacement carpet of similar quality would cost $1,000. The landlord could properly charge only $200 for the two years' worth of life (use) that would have remained if the tenant had not damaged the carpet.


Q: I am a tenant who is subletting one of the bedrooms in my apartment. My sublessor recently told me I had to pay interest on his security deposit. Is that true? (June 2003)

Yes. You are a master tenant, and have many of the responsibilities of a landlord. These include paying interest on the deposit every December and requiring that you have good cause to evict him. If you have not paid last year's interest, the subtenant may deduct it from the rent at the rate of 10% per year after giving you 15 days' prior written notice of his intent to do so.


Q: I am a landlord and my tenant gave me a 30-day notice of move-out yesterday. The notice also said she would not be paying last month's rent but that I should take it out of the deposit. I think I'm entitled to the rent and to keep the deposit for any damage repair or cleaning that may be required once she vacates. What are my rights? (June 2003)

You are entitled to the last month's rent, but if you demand it and she doesn't pay, your most practical recourse is to take it out of the deposit. If the damages and cleaning exceed the amount you have left for the deposit, you would need to take her to small claims court. Your other option would be to serve her with a Three-Day Notice to Pay Rent or Quit, but since she's moving out anyway that would likely have little practical benefit for you.


Q: I moved out of my apartment a month ago and I still have not received my security deposit from my landlord. What should I do? (March 2003)

A: State law (CA Civil Code section 1950.5) gives your landlord 21 days to provide an itemized accounting of the disposition of your security deposit and return the balance. Now that that time has elapsed, you should write to your landlord requesting the return of your deposit by a certain date. It's a good idea to give him a reasonable deadline, say a week, and then if you get no response or an unsatisfactory one, you may proceed by taking him to small claims court. Alternatively, you could file a petition with the Rent Board, but since the Board has no power to enforce a decision in your favor once you have moved out of the apartment, you might have to sue in small claims court if the landlord does not pay. You may contact Small Claims Legal Advisors at (510) 893-7160 or visit http://www.alameda.courts.ca.gov/Pages.aspx/Small-Claims for more information.


Q: My tenant just gave me a 30-day notice terminating her tenancy. I understand that there's a new state law that says I have to do a walk through inspection with her before she moves out. Can you tell me more? (March 2003)

The new law, amending CA Civil Code section 1950.5, states that you have to notify the tenant of her right to a walk through inspection, and if she desires one, the two of you need to try to set a convenient date and time that is not less than two weeks before the end of the tenancy. The purpose of this law is to allow landlords to identify the problems that they may hold tenants liable for prior to the tenants' moving out, so that tenants have enough time to fix the problems and avoid unexpected deductions from their security deposits.


Q: I am a landlord and am told that I have to pay interest on my tenants' security deposits. What is the interest rate I'm supposed to pay and when do I pay it? Can I have my tenants deduct it from the rent? (January 2003)

The Berkeley Rent Ordinance requires that landlords place the deposit in an interest-bearing account at an institution whose accounts are federally insured, and that landlords pay tenants interest at the rate actually earned in that account. Interest earned during a calendar year is to be paid each December, and you can either pay it to the tenants, or notify them what interest was earned and allow them to deduct it from their next rent check. In either case, you must furnish a statement showing the amount of deposit held, the interest rate paid, and the time period for which the interest was earned. But, if by January 10th of the following year, you do not pay or advise a tenant of the amount that may be deducted, the tenant may, with 15 days' written notice, deduct 10 percent of the deposit held from a future rent payment. Also, if you fail to place the deposit in a federally insured account, you are liable to the tenants for 10 percent on their deposit. Remember, a deposit includes not only the portion specifically designated as a security deposit, but also any rent monies paid in advance; thus, if you collect an $800 deposit and $800 for last month's rent, you must pay interest on $1600.


Q: I heard new state laws affecting tenants and landlords take effect this year. Can you tell me about them? (January 2003)

Several new laws went into effect January 1, 2003. Those with the broadest impact concern security deposits, eviction notice periods, and notice for landlord entry.

Security Deposits The statute governing security deposits (Civil Code section 1950.5) has been amended to establish a procedure for informing departing tenants what they must do to avoid deductions from their security deposit. The law requires a landlord, at the tenant's request, to do a walk-through inspection of the unit no earlier than two weeks before the tenancy is to end. Based on the inspection, the landlord must prepare an itemized list of repairs or cleaning that the tenant must undertake before the end of the tenancy for the full deposit to be returned. These items are limited to deductions that allowed by the statute, for instance, damages beyond ordinary wear and tear. One of the allowable purposes for withholding from the security deposit is "cleaning the premises upon termination of the tenancy." The amended law elaborates on this standard for tenancies beginning on or after January 1, 2003: a deposit may be used for cleaning of the premises "necessary to return the unit to the same level of cleanliness it was in at the inception of the tenancy." Thus, it is now even more important for landlords and for tenants to document the level of cleanliness at the start of the tenancy. The new law also increases the amount of damages that may be awarded to tenants for a landlord's bad-faith claim or retention of the all or part of the deposit, from $600 to twice the deposit amount.

60-Day Notice Required for Some Evictions Most evictions that formerly required a 30-day notice now require a 60-day notice. Only 30 days' notice is required if: 1) the tenant has resided in the unit for less than a year; or 2) the unit is a single family home or condo, the owner is selling to a buyer who intends to reside in the unit for at least one year, and owner opened escrow no more than 120 days before the notice is given. (These are amendments to Civil Code section 1946.1.)

Notice of Entry Landlords must now give written notice of entry, except in an emergency. The law governing landlord entry, Civil Code section 1954, retains the requirement that notice must be "reasonable," and that 24 hours' notice is presumed reasonable. The new law adds that 24 hours' notice is reasonable if it is personally delivered or left on the front door. If notice of entry is mailed, it is presumed reasonable only if mailed at least six days before the intended entry. If the purpose of entry is to show the unit to a prospective buyer, notice may be oral if the landlord has, within 120 days, given the tenant written notice that the property is for sale and that the tenant might be given oral notice of entry to show the unit. Twenty-four hours' oral notice is presumed reasonable, and the owner or agent must leave written evidence of having entered.


Q: I recently had to move out of town rather quickly for a job transfer, so I wasn't able to give my landlord the 30 days' notice required under my month-to-month rental agreement. Instead, on June 1, I notified him that I would be out of the apartment on June 10, and asked him to apply part of my security deposit to the 10 days of June rent. My landlord withheld a month's rent from my security deposit, even though he rented it again two days after I moved out. Is he allowed to do that? How can I get my money back? (August 2002)
A: California law entitles the landlord to withhold from your security deposit no more than the amount necessary to compensate him for his losses. He was entitled to withhold a month's rent only if he was unable to rent your apartment within a month of your notice. Since he re-rented your unit on June 13, he can charge you rent just for the first 12 days in June. You should write the landlord a letter requesting the return of 18 days of rent, and give him a deadline to respond, say, two weeks. If he does not refund the money, you can seek recourse by filing a petition with the Rent Board for an unrefunded security deposit or by filing in small claims court.

Q: I am a landlord with a question about security deposit interest. I put the deposit money in an interest bearing account and I pay the interest it earns every December to the tenants. However, every year I have to pay taxes on that deposit interest. Can I deduct the taxes I pay on the deposit interest from the interest I pay to the tenants?  (May 2002)

No. But you might want to check with a tax advisor to see if, while declaring the interest income on your tax return, you can deduct the interest paid as a business expense.


Q: I moved out of my apartment two weeks ago, and I just got my deposit back. My landlord has withheld a fee for rent I supposedly paid late in June of 2000 that I was never billed for or notified of. The fee was just subtracted from my deposit. Is that legal?  (May 2002)

It's not clear. You may be able to contest whether your rent was in fact late, or the amount of the charge (if it seems too high), but if your lease specifies a reasonable late fee and you were actually late, then your landlord can probably deduct it from your security deposit. However, having waited almost two years, an argument can be made that the landlord has waived his right to recover this charge. Unfortunately, if you want to challenge this deduction, you'll have to seek a ruling in small claims court.


Q: I have a tenant who has lived in an apartment I own for 14 years. When he moved in, he paid a $300 security deposit. Now the rent is $710, so the deposit wouldn't nearly cover any loss of rent or repairs if the tenant defaults on a payment or destroys something. I would like to increase the security deposit to cover at least one month's rent, and ideally, to increase it with each annual rent increase. Is this possible?  (May 2002)

No. Rent Board Regulation 705 prohibits any increase in the security deposit amount during the term of a tenancy.


Q: I moved into a house with three other roommates two years ago. We each paid one roommate $500 for the security deposit, and he, in turn, paid the landlord $2000. Now I am moving out and I want my security deposit back, but our landlord says he doesn't have to return it until my roommates move out. Is that correct?

Yes. According to Rent Board Regulation 706, a landlord is not required to refund any portion of a security deposit until he has recovered possession of the unit, i.e., until the unit is vacant. Because there is no telling when the unit will be vacant, especially if roommates are replaced as each one moves out, you should ask for your share of the security deposit from the remaining tenants or from your replacement, if there is one.


Q: I am a landlord and am told that I have to pay interest on my tenants' security deposits.  What is the interest rate I'm supposed to pay and when do I pay it?  Can I have my tenants deduct it from the rent?

The Berkeley Rent Ordinance requires that landlords place the deposit in an interest-bearing account at an institution whose accounts are federally insured, and that landlords pay tenants interest at the rate actually earned in that account. Interest earned during a calendar year is to be paid each December, and you can either pay it to the tenants, or notify them what interest was earned and allow them to deduct it from their next rent check. In either case, you must furnish a statement showing the amount of deposit held, the interest rate paid, and the time period for which the interest was earned. But if, by January 10th of the following year, you do not pay or advise a tenant of the amount that may be deducted, the tenant may, with 15 days' written notice, deduct 10 percent of the deposit held from a future rent payment. Also, if you fail to place the deposit in a federally insured account, you are liable to the tenants for 10 percent on their deposit. Remember, a deposit includes not only the portion specifically designated as a security deposit, but also any rent monies paid in advance; thus, if you collect an $800 deposit and $800 for last month's rent, you must pay interest on $1600.


Q: When I moved into a rental house more than 20 years ago, I paid the first and last month's rent. Of course the rent was much lower at that time. I am moving out of the house in a month, and my landlord says that I owe the difference between today's rent and the "last month's rent" I paid when I moved in. Do I have to pay this difference? He has been holding that money for 20 years. Shouldn't he have to pay me some kind of interest, and if so, how much should I get?

Your landlord is correct in asking for the difference between today's rental rate and the monthly rate in effect 20 years ago. Under California Civil Code section 1950.5(b), a security deposit is defined as "any payment, fee, deposit or charge, including but not limited to an advanced payment of the rent..." so the money paid at the beginning of the tenancy was a security deposit rather than the actual rent payment that would be due during the final month of your tenancy. Thus, you are obligated to pay your landlord the current rental rate for the last month of your tenancy, not the monthly rate you paid when you first moved in. The landlord is prohibited by Rent Board Regulations from increasing the security deposit during your tenancy.

Tenants should also be aware that a landlord is under no obligation to allow a tenant to use the deposit to cover the rent for the final month of a tenancy and can require tenants to make a final rent payment even though part of their deposit was referred to as "last month's rent" when the tenancy began. Of course, tenants can always ask the landlord to allow the deposit to be applied in that manner.

With regard to interest, the Berkeley Rent Stabilization Ordinance requires landlords to place each security deposit collected in a federally insured interest-bearing account that is designated for such deposits, and return the interest earned on individual deposits to tenants each December. If the landlord fails to retain a security deposit in an appropriate account, the tenant is entitled to a refund on his or her deposit of 10 percent simple interest per year. The balance of any unrefunded interest earned on a security deposit must be returned along with the appropriate part of the principal after the tenant moves out.


Q: I gave my landlord notice to vacate my unit, and he handed me a checklist of things to take care of in order to get my security deposit back. What caught my eye was that the landlord said not to bother cleaning the walls because he always automatically deducts the cost of repainting from the security deposit. I only lived in the unit for six months, and the walls look just as good as they did the day I moved in. Can he legally charge me for something that doesn't need repair?

No, a landlord cannot automatically charge a tenant for the expense of repainting, especially if the unit had been freshly painted within the last six months. You could only be charged for painting if you somehow damaged or marred the paint, thereby, requiring patching and repainting. Moreover, as a general rule tenants cannot be charged for normal wear and tear, which is the natural, gradual deterioration that happens over time through everyday use.

The Rent Board has recently inaugurated a Security Deposit Program Pilot Project. This program is designed to help prevent disputes between tenants and landlords over the refund of security deposits. The tenants who participate in the program will have their apartments videotaped at the start of their tenancy. The tapes will be used as evidence of the condition of the property at the inception of the tenancy and should assist landlords and tenants with any security deposit dispute that may arise at the end of tenancy. Berkeley tenants may call the Rent Board Office for more information.


Q: One of my tenants recently asked for interest on her security deposit. I told her that I don't have her security deposit because the previous owner didn't turn over any deposit money when I bought the building a year ago. Still, she's insisting that I owe her the interest. Shouldn't she get in touch with the former landlord about this?

California Civil Code §1950.5 (which regulates security deposits for residential rental property) says, in subsection (i), that if the seller fails to either refund the security deposit to the tenant or turn it over to the buyer, then both the new owner and the seller are responsible for the tenant's security deposit. As the new owner, however, you bear the ultimate responsibility to your tenant for the deposit, unless you can establish that you made a reasonable investigation and believed in good faith that the money was either transferred or returned before you purchased the property.

Since you did not receive the security deposit from the former landlord, you should ask the former landlord whether he returned the security deposit to the tenant. If he did not, you should ask that the money be transferred to you. In any event, you are considered to be holding the money and, therefore, are responsible for refunding interest.

Interest earned on deposits held during 2000 must be returned to tenants no later than January 10, 2001, either as a rent credit or a cash payment. As of January 11th, tenants may recover the interest, at the rate of 10 percent simple interest per year, by deducting the interest from the rent. The tenant must notify the landlord in writing of his/her intention to recover the interest from the rent at least 15 days before taking the deduction.


Q: Can I legally request a deposit from a subtenant? Also, what kind of legal document should I prepare for the person who sublets my apartment?

Under California state law, you would function as the landlord for your subtenant. State law allows landlords to request a deposit of as much as two times the monthly rent for an unfurnished unit and three times the rent for a furnished unit. If you decide to hold a security deposit, Berkeley law requires that you place it in an insured, interest bearing account and annually return the interest earned to the tenant.

When you sublet, you should prepare a written sublease agreement that identifies the parties and the rental unit, and addresses at least the following points: (1) The amount of rent and when, where and to whom it should be paid; (2) The subtenant's obligation to observe and honor the terms of the original rental agreement that you entered into with your landlord; and (3) When the sub-tenancy begins and when and how it will terminate - including a statement affirming your right to recover the unit. Provisions regarding the payment of utilities and the care and condition of your belongings may also be helpful.

You should be aware that subletting might trigger a rent increase under state law.


Q:  My building was completed a year ago and I moved in shortly thereafter.  I know my unit's considered a "newly constructed rental." Now my landlord wants me to sign a new lease that has several substantive changes, including a $100 rent increase, a $250 increase in the security deposit and a note telling me that he was no longer responsible for keeping security deposits separate from  general funds or for paying interest on my deposit.  Can he do all these things?

Since new construction is exempt from the rent ceiling provisions of the Ordinance, there is no limit on the amount your landlord can raise the rent when your lease expires.  New construction is not, however, exempt from the requirement that security deposits be held in interest bearing accounts and that interest on deposits be refunded in December of each year.  Furthermore, Regulation 705 prohibits a landlord from increasing a security deposit during a tenancy.  Finally, new construction is not exempt from compliance with the good cause for eviction provisions of the Ordinance.  Therefore, you cannot be evicted for refusing to sign a lease that is materially different from your current lease.


Q: I will soon move out of my apartment in Berkeley and I just talked to the manager on site about a possible time to return the key and inspect the apartment after I clean the unit and remove my belongings.  The problem is, he may not be able to do a walk through with me on the date I move out.  What can I do to make sure I get my security deposit back?

State law requires a landlord to provide an itemized accounting of the disposition of the security deposit and to refund the unused portion within 21 days of the date the tenant returns possession of the unit.  Taking pictures is a good way to protect yourself from claims that the unit needed additional cleaning.  If your landlord is unable to inspect the unit with you, you might have a friend or neighbor inspect the unit with you after it is cleaned.  If a dispute develops concerning your refund, you can file a Small Claims Court action or file a petition with the Rent Board.  (You might still have to go to Small Claims Court to enforce the Rent Board's decision.)  Your friend or neighbor will be able to testify about the condition of the unit.


Q: I have a question about the security deposit I paid in September 1997. I am leaving my apartment and moving back to France at the end of my contract in December 1998. I would like to know if I can get my deposit back from the landlord before I leave. If not what happens if I don't receive my deposit back?

Your landlord is required by law to return your security deposit within three weeks of the date you vacate your apartment. If any of the deposit is withheld, your landlord is required to provide an itemized list of how the unrefunded money was used, i.e., applied to unpaid rent, applied to the cost of painting and repair, etc. If your landlord does not refund your deposit or provide you with an accounting of how any unrefunded portion of the deposit was used, you may file a petition with the Rent Board. You may file the petition with the Rent Board from France by providing proof of the amount of the deposit paid and photographs of the condition of the property when you vacated the apartment. The landlord will be given the opportunity to refute your claim that you were entitled to a refund. If it is determined that money is owed you, you might have difficulty collecting the money since you are out of the country. However, until the money is refunded, the landlord will be out of compliance with the Rent Ordinance and, therefore, prohibited from taking annual general adjustments. Thus, there will be some incentive for him or her to refund the security deposit.


Q: I recently received your newsletter in which you informed tenants that landlords have until the 10th of January to return interest on security deposits held during the previous year. As a result, I sent my landlady a letter with my February rent payment notifying her that I would deduct the interest from the March rent at the rate of 10% per annum. Several days later, my landlord left a check for my interest, but at a rate of only 1.25%. Do I have a right to see my landlady's bank statement to verify that my deposit only accrues 1.25%?

First, Regulation 704 sets the January 10th deadline for payment of interest on security deposits. If the landlord failed to pay you any interest before that date, he or she was required to pay interest at the 10% per annum rate, not at the actual rate. You were correct in giving your landlord at least 15 days written notice before recovering the interest by deducting it from your rent. Now you are entitled to deduct the interest at the 10% per annum rate.

If the landlord had paid you before January 10th, he or she could have paid you the actual interest paid by the bank. In that case, however, upon receipt of a written request, the landlord must provide written verification of the financial institution, branch and location, type of account, current rate of interest and the names and capacities of all persons who hold title to the account.


Q: After I vacated my apartment, I did not receive my security deposit refund for five weeks. Since my landlord didn't return my deposit in the required 21 days, is there anything I can do to recover damages?

If the landlord returned your full deposit, there does not appear to be any ground for which you can recover damages. By refunding the deposit late, the landlord was required to return the full deposit. Moreover, if your landlord had not returned the deposit at all or had refunded only a portion of the deposit, and you were able to establish that the retention of your money was done in bad faith, the law imposes a $600 damage award.


Q: My landlord withheld my security deposit for painting and carpet cleaning. The carpet is soiled, and has taken some damage, but it was an old carpet before I moved in. As I recall, the security deposit cannot be withheld for normal wear and tear. Don't these fall into that category?

Civil Code Section 1950.5 allows a landlord to use a security deposit to cover the cost of cleaning an apartment between tenancies. Carpet cleaning would appear to fall into this category. The only exception would be in the case where a landlord does not routinely clean the carpet between each tenancy. In such a situation, you could argue that a portion of the cleaning costs you are being required to pay should have been borne by prior tenants.

Similarly, whether painting is considered a "cleaning cost" depends partially on the landlord's routine business practices. Whether painting is considered a consequence of normal wear and tear depends on whether the vacating tenant's use of the unit made the painting necessary. If, for example, the tenant marked on the walls or otherwise damaged them to the extent that patching and/or painting were unavoidable repairs, then the landlord could reasonably require the tenant to bear the expense of such repairs. California Civil Code disallows the use of a security deposit for the repair of defects that preexisted a tenancy or for defects that developed as a result of the cumulative wear and tear that occurred during several tenancies.

 


Q: I am moving out of my apartment this week, and the building manager has given me an itemized list of the possible charges for cleaning the apartment, but the prices seem outrageous. Is there any way to make them prove that the services actually cost as much as they claim?

When deductions are taken from your deposit, you can always ask to see the actual receipts for the work performed. You can also get estimates from other, independent cleaning services to see if the rates they would charge are comparable to the amount deducted from your deposit. If you believe the amount deducted was excessive, you may file a petition with the Rent Board seeking a refund of the withheld security deposit. You may also file a claim in Small Claims Court.


Q: We own a unit that is not under rent control. When our tenant moves out, are we obligated to give them interest on their deposit?

If your unit is completely exempt from the Rent Ordinance, then there is no obligation to refund interest on security deposits. If the unit is partially exempt, new construction or a Section 8 contract rental for example, then you are required to refund the interest earned on security deposits on an annual basis.


Q: We are about to move from an apartment we've lived in for eight years. When we moved in, we paid a last month's rent and a security deposit. At the time, I assumed the last month's rent would be applied to our final month in the unit. Is this true? If not, can we ask our landlords to apply the amount that we deposited to the last month and simply pay the difference? Or do we have to write a check for the full month's rent and then negotiate with the landlord for the return of both the last month's rent and a security deposit?

Under California law, the security deposit on an unfurnished apartment may not exceed two month's rent. The deposit on a furnished unit may not exceed three month's rent. A security deposit is defined as "any payment, fee, deposit or charge, including but not limited to an advanced payment of the rent..." Since the money paid at the beginning of the tenancy was a security deposit rather than the actual payment of the last month's rent, the rent paid for the last month of your tenancy must equal the current rent charged, not the monthly rate you paid when you first moved in.

Your landlord can require you to pay the last month's rent rather than deduct it from your security deposit. Of course, you can always ask the landlord to allow you to deduct it.

 


Have a question?  E-mail us at rent@ci.berkeley.ca.us

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