Handling security deposits properly is one of the most important responsibilities a landlord has. In California, the law is clear about what you can and cannot deduct from a tenant’s security deposit, and violating these rules can lead to serious financial penalties. Landlords who make unauthorized deductions or fail to follow proper return procedures may be required to return the full deposit and even pay extra damages. To avoid disputes and remain compliant with California law, landlords should understand what qualifies as a legitimate deduction, how to document it, and what common mistakes to avoid.
What Security Deposits Are Meant to Cover
A security deposit is intended to protect landlords against financial losses caused by tenant actions during the lease. California Civil Code §1950.5 outlines the specific uses for which a landlord may apply a tenant’s security deposit.
Permitted uses of a security deposit include:
- Unpaid rent
- Repair of damage beyond normal wear and tear
- Cleaning the unit to return it to the same level of cleanliness as at move-in
- Replacing or restoring personal property (such as keys or remote controls) provided by the landlord if the tenant fails to return them
The key is that deductions must be reasonable, documented, and directly tied to restoring the unit to its original move-in condition—minus ordinary wear and tear.
Common Legal Deductions from Security Deposits
Unpaid Rent
If a tenant leaves without paying rent for the final month, or owes back rent for previous months, the amount due can legally be deducted from the deposit. Be sure to provide an itemized breakdown showing how much is owed and for which rental period.
Excessive Cleaning
You can deduct for cleaning only if the tenant leaves the unit significantly dirtier than it was at move-in. This does not include normal dust or minor wear. If the unit requires professional cleaning to meet the condition it was in when delivered, that cost may be deducted.
Examples of acceptable cleaning deductions:
- Dirty ovens or appliances
- Pet stains or odors
- Trash left behind in the unit
- Filthy bathrooms or kitchens
Photos and a copy of the move-in checklist are essential to support cleaning charges.
Damage Beyond Normal Wear and Tear
California law allows landlords to deduct for damages that go beyond what is considered typical use. This includes holes in walls, broken windows, torn blinds, or other damage caused by neglect or abuse.
Examples of deductible damages:
- Cigarette burns on carpet
- Broken cabinet doors or appliances
- Large holes in drywall
- Missing fixtures or hardware
Always differentiate between damage and wear. A faded carpet or minor nail holes are considered normal; a cracked tile or shattered mirror is not.
Replacement of Missing Property
If a tenant fails to return keys, garage remotes, or other property provided with the rental, the cost to replace them may be deducted. Be sure to reference these items in your lease and include the replacement cost on the move-out accounting.
What You Cannot Deduct from a Security Deposit
Not all damage or loss justifies a deduction. There are several common mistakes landlords make that can lead to legal disputes or full refunds being ordered by a court.
Normal Wear and Tear
You may not deduct for wear that results from ordinary use of the home over time. This includes minor carpet wear, faded paint, loose doorknobs, or worn-out blinds.
Other examples of wear and tear include:
- Scuffed walls from furniture
- Minor marks on countertops
- Slightly worn grout or tile in bathrooms
- Light scratches on hardwood floors
Routine Upgrades or Renovations
You can’t use the deposit to pay for improvements or upgrades that were not caused by tenant damage. For example, replacing cabinets or flooring that were simply old or outdated is not the tenant’s responsibility.
Unlawful Fees or Charges
Deductions for application fees, nonrefundable deposits, or penalties not outlined in the lease are not permitted. California law prohibits landlords from labeling any part of the security deposit as nonrefundable.
How to Document and Return the Security Deposit Properly
Landlords in California have 21 calendar days from the date the tenant vacates the property to return the deposit or provide an itemized deduction statement. If deductions exceed $125, you must also include copies of receipts for any cleaning, repairs, or replacements.
Required steps for legal compliance:
- Conduct a final walkthrough and document the condition of the unit
- Compare the move-out condition to your move-in checklist
- Provide an itemized statement detailing each deduction
- Include copies of invoices or receipts if deductions exceed $125
- Return any remaining balance of the deposit via check or other traceable method
If repairs or cleaning services haven’t been completed by the 21-day deadline, you may provide a good faith estimate and follow up with receipts once the work is finished.
How to Avoid Disputes Over Security Deposit Deductions
Tenants often challenge deductions when they feel the charges are unfair or excessive. Preventing disputes starts with clear documentation and good communication from day one.
Best practices to avoid problems:
- Use a detailed move-in checklist with tenant signatures and photos
- Include photos and notes during your move-out inspection
- Be consistent with policies and apply them equally to all tenants
- Send a polite and professional cover letter with your deduction statement
- Be willing to negotiate if the tenant raises legitimate concerns
Security deposit disputes are one of the most common landlord-tenant conflicts in California. But when landlords understand the law, document thoroughly, and communicate clearly, they are much more likely to resolve issues without legal trouble.