Cadden & Fuller LLP Cadden & Fuller LLP

A Client-Focused Approach to Business and Real Estate Law

How long do you have to return a security deposit?

On Behalf of | Sep 16, 2019 | Real Estate |

Owning a commercial property is a lot of work. There are many things to keep track of, especially when it comes to your tenants. You want to do everything in your power to do right by the law and your lease agreement.

When a tenant chooses not to renew their lease, you want to wrap up your relationship as cleanly as possible. There’s no doubt that one of the most common questions you’ll face in this time from your tenant is when they’ll receive their security deposit back. The answer? Well, that depends on your reason for collecting the deposit.

The many variables

If the amount of the deposit your tenant paid was equal to one month’s rent and only to cover defaulted rent, then you have 30 days to return the deposit. However, if the deposit was more than one month’s rent and to protect against default on the rent, then you have 14 days to return the amount over one month’s rent. After that, you must return the amount of one month’s rent within 30 days.

You must return a security deposit you collect to cover cleaning and repair costs as well as defaulted rent to your tenant within 30 days. However, you may still deduct for reasonably necessary repairs and cleaning costs before returning the remainder to your tenant within the grace period. Cleaning and repair stipulations for the security deposit should in your landlord-tenant agreement.

Consequences for violating the law

Failing to follow the law and return a security deposit in the proper amount of time could mean a court ruling you did so in bad faith and order you to pay $200 plus any damages. That’s why closely following the law on security deposits in California is so important.

Returning a security deposit is your last chance to leave a good impression with your tenant. Generally, you have 30 days to return a security deposit but that isn’t always the case. Make sure you understand how the law applies to you and your business.