Basic Rules Governing Security Deposits
At the beginning of the tenancy, the landlord most likely will require you to pay a security deposit. The landlord can use the security deposit to pay for the landlord’s expenses if you fail to perform some duty as a tenant (that is, if you default on a tenant obligation). For example, a landlord can use your security deposit if you default by not paying all of your rent before you move out, by damaging the rental unit beyond normal wear and tear, or by leaving the unit less clean than when you moved in.54 The legal definition of "security deposit" sums all of this up by stating that a security deposit is a charge imposed by the landlord to secure the landlord against future tenant defaults.55
Under California law, a lease or rental agreement cannot call a security deposit "nonrefundable."56 Therefore, at the end of the tenancy, the landlord must return to you any payment that is a security deposit, unless the landlord properly uses the deposit to pay for a tenant default (see below and Refunds of Security Deposits).57
Almost all landlords charge tenants a security deposit. The security deposit may be called "last month’s rent," "security deposit," "pet deposit," "key deposit," or "cleaning deposit." The security deposit may combine the last month’s rent plus a specific amount for security. It doesn’t matter what these fees are called. Any deposit that protects the landlord if you default on a tenant obligation is a security deposit.58
A landlord may also charge a tenant a fee that does not protect the landlord against a tenant default. These fees are not part of the security deposit, and therefore usually are not refundable. The following charges and fees are not part of the security deposit:
The first month’s rent.
The landlord can require you to pay a security deposit plus your first month’s rent before you move in.
Example: Suppose that you have agreed to rent an unfurnished apartment for $500 a month. Before you move in, the landlord can require you to pay up to two times the amount of the monthly rent as a security deposit ($500 x 2 = $1,000). The landlord also can require you to pay the first month’s rent of $500 in addition to the $1,000 security deposit.
The landlord cannot also demand a $200 cleaning deposit and a $15 key deposit. These kinds of fees protect the landlord if you default (for example, by not returning the keys), and therefore are subject to the law’s limit on the amount of security allowed. In our example, the landlord cannot require this extra security because the total of all deposits ($1,215) would be more than the $1,000 allowed by law.
However, the landlord can charge you a reasonable fee to reimburse the landlord for the pre-lease administrative costs involved in choosing you as a tenant. This fee does not count as part of the security deposit because it does not protect the landlord if you default somehow as a tenant. This fee could cover the costs, for example, of providing application forms, listing the unit for rent, and interviewing and screening you.62
If you and the landlord agree that the landlord will make structural, decorative, or furnishing alterations that you have requested and agreed to pay for, the amount that you pay for these alterations is not part of the security deposit. However, if the alterations that you request involve cleaning or repairing damage caused by a previous tenant, this additional amount would be part of the security deposit.63
Although a payment that is a security deposit cannot be "nonrefundable,"64 the law allows the landlord to keep part or all of the security deposit under certain circumstances. Examples include a tenant moving out and still owing rent, or leaving the rental unit in a damaged condition. Deductions from security deposits are discussed in detail on Suggested Approaches to Security Deposit Deductions.
Because you normally are entitled to a refund of your security deposit when you move out, make sure that your rental agreement or lease clearly states that you have paid a security deposit to the landlord, and accurately shows how much you have paid. The rental agreement or lease should also describe the circumstances under which the landlord can keep part or all of the security deposit. Most landlords will also give you a written receipt for all amounts that you pay as a security deposit. Keep your rental agreement or lease and the receipt in case of a dispute.