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What Should Landlords Know About Security Deposits?

What Should Landlords Know About Security Deposits?

The number of renters in San Diego is at an all-time high. It's not a bad time to become a landlord. 

Becoming a landlord comes with its share of stressors, though. One of them is security deposits. What are security deposits, and what rules and regulations should you know before making a tenant pay?

Let's talk about it. Read on to learn all about security deposit tips for landlords.

What Are Security Deposits For? 

A security deposit is a sum of money that landlords can collect from tenants at the beginning of their tenancy. Usually, a tenant will pay a security deposit as soon as they sign the lease.

The deposit is what secures the property for the tenant. In other words, outside of extenuating circumstances (which are few and far between), once the tenant pays the deposit, they're guaranteed the specific rental home.

Security deposits benefit both tenants and landlords.

For landlords, a security deposit will protect them against future financial burdens that could potentially arise from the tenant's stay on their property.

For example, if a tenant causes serious damage to the property, that money will cover at least some of the cost of repair. 

For tenants, the security deposit stops them from having to dip into their own savings to repair the property if something goes wrong. They also get the deposits back if they're good tenants, and that money can be a month or two of rent at their next location. 

How Much Can You Charge? 

If you're newly becoming a landlord in San Diego, even if you were a landlord elsewhere, you might not know the regulations regarding security deposit limits. 

If the unit is unfurnished, you can only charge the equivalent of two months' rent. If it's furnished, you can charge three months' rent. 

So if your unit was $1,300 per month without furniture, the deposit could be a max of $2,600. 

This is a maximum and you're welcome to charge less than that (which can be advantageous if you're struggling to attract potential tenants. 

Do You Have to Return a Security Deposit? 

Landlords must return security deposits for rental properties in most situations. You have 21 days to return the deposit unless you have a good reason not to. 

Tenants are not responsible for normal wear and tear in their rental units. Normal wear and tear includes things like:

  • Chipped paint
  • Small nail or tack marks 
  • Small dings on the walls
  • Normal carpet or paint discoloration
  • Carpet wear

This is an incomplete list. In short, normal wear and tear is anything that can happen even if the tenant is taking perfect care of the rental unit. 

If you don't return the deposit, you must list exactly why you're keeping it. Tenants can take legal action (and will likely be successful) if you are keeping their deposit for an illegitimate reason. 

Do You Understand Security Deposits?

Security deposits are straightforward. They're refundable sums of money that protect both you and your tenants from having to pay for damage later on. 

If rules and regulations around security deposits (or other rental property concerns) are confusing, we want to help! Contact McClain Properties for professional property management services.