California laws are stringent when it comes to landlords returning security deposits to tenants. Under California Civil Code 1950.5 the statute outlines the amount of deposit a landlord can charge, the instances a landlord can use the deposit, and the deadline the landlord has to refund the deposit to a tenant. It also addresses the steps a tenant can take if the landlord refuses to refund a security deposit.

One of the most common disagreements between a landlord and tenant is over the refund of the tenant’s security deposit after the tenant has moved out of the rental unit. A landlord can withhold from the security deposit only those amounts that are reasonably necessary. The security deposit cannot be used for repairing defects that existed in the unit before a tenant moved in, for conditions caused by normal wear and tear during tenancy or previous tenancies, or for cleaning a rental unit that is as clean as it was when a tenant moved in. A residential lease can never state that a security deposit is “nonrefundable.”

Under California law, within twenty one days after a tenant moves out, a landlord must either:

  1. Send the tenant a full refund of the deposit, or
  2. Mail or personally deliver to the tenant an itemized statement that lists the amounts of any deductions from the security deposit and the reasons for the deductions, together with a refund of any amounts not deducted.

The landlord also must send the tenant copies of receipts for the charges that the landlord incurred to repair or clean the rental unit and that the landlord deducted from the security deposit.

The landlord is not required to send the tenant copies of receipts, or a good faith estimate, if the repairs or cleaning cost less than $126 or if the tenant waives his or her right to receive them.

A tenant has two options to dispute a landlord’s deductions. The first step for both is to call and write the landlord to request a refund of the entire security deposit. The tenant can also suggest mediation to resolve the dispute. If the landlord presents good reasons for keeping some or all of the deposit, it’s a good idea to enter into a reasonable compromise with the landlord.

The other option is to sue the landlord in small claims court for return of the security deposit. However, the landlord then can file a counterclaim against the tenant. In the counterclaim, the landlord can assert a right to make deductions from the deposit, for example, for unpaid rent or for damage to the rental that the landlord alleges the tenant caused. Then, each party will have to argue in court as to why he or she is entitled to the deposit.

If a tenant can prove to the court that the landlord acted in “bad faith” in refusing to return the security deposit, the court can order the landlord to pay the tenant the amount of the improperly withheld deposit, plus up to twice the amount of the security deposit as a “bad faith” penalty.

Whether a party can collect attorney’s fees if he or she wins such a suit depends on whether the lease agreement contains an attorney’s fee clause. If the lease or rental agreement contains an attorney’s fee clause, a party can claim attorney’s fees as part of the judgment, even if the clause states that only the landlord can collect attorney’s fees.

However, a party can only collect attorney’s fees if he or she was represented by an attorney.

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