State of California Security Deposit Law

1950.5.

   (a) This section applies to security for a rental
agreement for residential property that is used as the dwelling of
the tenant.

   (b) As used in this section, "security" means any payment, fee,
deposit or charge, including, but not limited to, an advance
payment of rent, used or to be used for any purpose, including,
but not limited to, any of the following:
     (1) The compensation of a landlord for a tenant's default in
the payment of rent.
     (2) The repair of damages to the premises, exclusive of
ordinary wear and tear, caused by the tenant or by a guest or
licensee of the tenant.
     (3) The cleaning of the premises upon termination of the
tenancy.
     (4) To remedy future defaults by the tenant in any obligation
under the rental agreement to restore, replace, or return personal
property or appurtenances, exclusive of ordinary wear and tear, if
the security deposit is authorized to be applied thereto by the
rental agreement.
   (c) A landlord may not demand or receive security, however
denominated, in an amount or value in excess of an amount equal to
two months' rent, in the case of unfurnished residential property,
and an amount equal to three months' rent, in the case of furnished
residential property, in addition to any rent for the first month
paid on or before initial occupancy.
   This subdivision does not prohibit an advance payment of not
less than six months' rent where the term of the lease is six
months or longer.
   This subdivision does not preclude a landlord and a tenant from
entering into a mutual agreement for the landlord, at the request
of the tenant and for a specified fee or charge, to make
structural, decorative, furnishing, or other similar alterations,
if the alterations are other than cleaning or repairing for which
the landlord may charge the previous tenant as provided by
subdivision (e).
   (d) Any security shall be held by the landlord for the tenant
who is party to the lease or agreement.  The claim of a tenant to
the security shall be prior to the claim of any creditor of the
landlord.
   (e) The landlord may claim of the security only those amounts as
are reasonably necessary for the purposes specified in subdivision
(b).  The landlord may not assert a claim against the tenant or the
security for damages to the premises or any defective conditions
that preexisted the tenancy, for ordinary wear and tear or the
effects thereof, whether the wear and tear preexisted the tenancy
or occurred during the tenancy, or for the cumulative effects of
ordinary wear and tear occurring during any one or more tenancies.
   (f) Within three weeks after the tenant has vacated the
premises, the landlord shall furnish the tenant, by personal
delivery or by first-class mail, postage prepaid, a copy of an
itemized statement indicating the basis for, and the amount of, any
security received and the disposition of the security and shall
return any remaining portion of the security to the tenant.
   (g) Upon termination of the landlord's interest in the dwelling
unit in question, whether by sale, assignment, death, appointment
of receiver or otherwise, the landlord or the landlord's agent
shall, within a reasonable time, do one of the following acts,
either of which shall relieve the landlord of further liability
with respect to the security held:
     (1) Transfer the portion of the security remaining after any
lawful deductions made under subdivision (e) to the landlord's
successor in interest.  The landlord shall thereafter notify the
tenant by personal delivery or by first-class mail, postage
prepaid, of the transfer, of any claims made against the security,
of the amount of the security deposited, and of the names of the
successors in interest, their address, and their telephone number.
If the notice to the tenant is made by personal delivery, the
tenant shall acknowledge receipt of the notice and sign his or her
name on the landlord's copy of the notice.
     (2) Return the portion of the security remaining after any
lawful deductions made under subdivision (e) to the tenant,
together with an accounting as provided in subdivision (f).
   (h) Prior to the voluntary transfer of a landlord's interest in
a dwelling unit, the landlord shall deliver to the landlord's
successor in interest a written statement indicating the following:
     (1) The security remaining after any lawful deductions are
made.
     (2) An itemization of any lawful deductions from any security
received.
     (3) His or her election under paragraph (1) or (2) of
subdivision (g).
   Nothing in this subdivision shall affect the validity of title
to the real property transferred in violation of the provisions of
this subdivision.
   (i) In the event of noncompliance with subdivision (g), the
landlord's successors in interest shall be jointly and severally
liable with the landlord for repayment of the security, or that
portion thereof to which the tenant is entitled, when and as
provided in subdivisions (e) and (f).  A successor in interest of a
landlord may not require the tenant to post any security to replace
that amount not transferred to the tenant or successors in interest
as provided in subdivision (g), unless and until the successor in
interest first makes restitution of the initial security as
provided in paragraph (2) of subdivision (g) or provides the tenant
with an accounting as provided in subdivision (f).
   Nothing in this subdivision shall preclude a successor in
interest from recovering from the tenant compensatory damages that
are in excess of the security received from the landlord previously
paid by the tenant to the landlord.
   Notwithstanding the provisions of this subdivision, if, upon
inquiry and reasonable investigation, a landlord's successor in
interest has a good faith belief that the lawfully remaining
security deposit is transferred to him or her or returned to the
tenant pursuant to subdivision (g), he or she shall not be liable
for damages as provided in subdivision (k), or any security not
transferred pursuant to subdivision (g).
   (j) Upon receipt of any portion of the security under paragraph
(1) of subdivision (g), the landlord's successors in interest shall
have all of the rights and obligations of a landlord holding the
security with respect to the security.
   (k) The bad faith claim or retention by a landlord or the
landlord's successors in interest of the security or any portion
thereof in violation of this section, or the bad faith demand of
replacement security in violation of subdivision (i), may subject
the landlord or the landlord's successors in interest to statutory
damages of up to six hundred dollars ($600), in addition to actual
damages.  The court may award damages for bad faith whenever the
facts warrant such an award, regardless of whether the injured
party has specifically requested relief.  In any action under this
section, the landlord or the landlord's successors in interest
shall have the burden of proof as to the reasonableness of the
amounts claimed or the authority pursuant to this section to demand
additional security deposits.
     (l) No lease or rental agreement shall contain any provision
characterizing any security as "nonrefundable."
   (m) Any action under this section may be maintained in small
claims court if the damages claimed, whether actual or statutory or
both, are within the jurisdictional amount allowed by Section
116.220 of the Code of Civil Procedure.
   (n) Proof of the existence of and the amount of a security
deposit may be established by any credible evidence, including, but
not limited to, a canceled check, a receipt, a lease indicating the
requirement of a deposit as well as the amount, prior consistent
statements or actions of the landlord or tenant, or a statement
under penalty of perjury that satisfies the credibility
requirements set forth in Section 780 of the Evidence Code.
   (o) The amendments to this section made during the 1985 portion
of the 1985-86 Regular Session of the Legislature that are set
forth in subdivision (e) are declaratory of existing law.

1950.6.

   (a) Notwithstanding Section 1950.5, when a landlord or his
or her agent receives a request to rent a residential property from
an applicant, the landlord or his or her agent may charge that
applicant an application screening fee to cover the costs of
obtaining information about the applicant.  The information
requested and obtained by the landlord or his or her agent may
include, but is not limited to, personal reference checks and
consumer credit reports produced by consumer credit reporting
agencies as defined in Section 1785.3.  A landlord or his or her
agent may, but is not required to, accept and rely upon a consumer
credit report presented by an applicant.
   (b) The amount of the application screening fee shall not be
greater than the actual out-of-pocket costs of gathering
information concerning the applicant, including, but not limited
to, the cost of using a tenant screening service or a consumer
credit reporting service, and the reasonable value of time spent by
the landlord or his or her agent in obtaining information on the
applicant.  In no case shall the amount of the application
screening fee charged by the landlord or his or her agent be
greater than thirty dollars ($30) per applicant.  The thirty dollar
($30) application screening fee may be adjusted annually by the
landlord or his or her agent commensurate with an increase in the
Consumer Price Index, beginning on January 1, 1998.
   (c) Unless the applicant agrees in writing, a landlord or his or
her agent may not charge an applicant an application screening fee
when he or she knows or should have known that no rental unit is
available at that time or will be available within a reasonable
period of time.
   (d) The landlord or his or her agent shall provide, personally,
or by mail, the applicant with a receipt for the fee paid by the
applicant, which receipt shall itemize the out-of-pocket expenses
and time spent by the landlord or his or her agent to obtain and
process the information about the applicant.
   (e) If the landlord or his or her agent does not perform a
personal reference check or does not obtain a consumer credit
report, the landlord or his or her agent shall return any amount of
the screening fee that is not used for the purposes authorized by
this section to the applicant.
   (f) If an application screening fee has been paid by the
applicant and if requested by the applicant, the landlord or his or
her agent shall provide a copy of the consumer credit report to the
applicant who is the subject of that report.
   (g) As used in this section, "landlord" means an owner of
residential rental property.
   (h) As used in this section, "application screening fee" means
any nonrefundable payment of money charged by a landlord or his or
her agent to an applicant, the purpose of which is to purchase a
consumer credit report and to validate, review, or otherwise
process an application for the rent or lease of residential rental
property.
   (i) As used in this section, "applicant" means any entity or
individual who makes a request to a landlord or his or her agent to
rent a residential housing unit, or an entity or individual who
agrees to act as a guarantor or cosignor on a rental agreement.
   (j) The application screening fee shall not be considered an
"advance fee" as that term is used in Section 10026 of the Business
and Professions Code, and shall not be considered "security" as
that term is used in Section 1950.5.
   (k) This section is not intended to preempt any provisions or
regulations that govern the collection of deposits and fees under
federal or state housing assistance programs.

1950.7.

   (a) Any payment or deposit of money the primary function
of which is to secure the performance of a rental agreement for
other than residential property or any part of the agreement, other
than a payment or deposit, including an advance payment of rent,
made to secure the execution of a rental agreement, shall be
governed by the provisions of this section.  With respect to
residential property, the provisions of Section 1950.5 shall
prevail.
   (b) Any such payment or deposit of money shall be held by the
landlord for the tenant who is party to the agreement.  The claim
of a tenant to the payment or deposit shall be prior to the claim
of any creditor of the landlord, except a trustee in bankruptcy.
   (c) The landlord may claim of the payment or deposit only those
amounts as are reasonably necessary to remedy tenant defaults in
the payment of rent, to repair damages to the premises caused by
the tenant, or to clean the premises upon termination of the
tenancy, if the payment or deposit is made for any or all of those
specific purposes.  Where the claim of the landlord upon the
payment or deposit is only for  defaults in the payment of rent,
then any remaining portion of the payment or deposit shall be
returned to the tenant no later than two weeks after the date the
landlord receives possession of the premises.  Where the claim of
the landlord upon the payment or deposit includes amounts
reasonably necessary to repair damages to the premises caused by
the tenant or to clean the premises, then any remaining portion of
the payment or deposit shall be returned to the tenant at a time as
may be mutually agreed upon by landlord and tenant, but in no event
later than 30 days from the date the landlord receives possession
of the premises.
   (d) Upon termination of the landlord's interest in the unit in
question, whether by sale, assignment, death, appointment of
receiver or otherwise, the landlord or the landlord's agent shall,
within a reasonable time, do one of the following acts, either of
which shall relieve the landlord of further liability with respect
to the payment or deposit:
     (1) Transfer the portion of the payment or deposit remaining
after any lawful deductions made under subdivision (c) to the
landlord's successor in interest, and thereafter notify the tenant
by personal delivery or certified mail of the transfer, of any
claims made against the payment or deposit, and of the transferee's
name and address.  If the notice to the tenant is made by personal
delivery, the tenant shall acknowledge receipt of the notice and
sign his or her name on the landlord's copy of the notice.
     (2) Return the portion of the payment or deposit remaining
after any lawful deductions made under subdivision (c) to the
tenant.
   (e) Upon receipt of any portion of the payment or deposit under
paragraph (1) of subdivision (d), the transferee shall have all of
the rights and obligations of a landlord holding the payment or
deposit with respect to the payment or deposit.
   (f) The bad faith retention by a landlord or transferee of a
payment or deposit or any portion thereof, in violation of this
section, may subject the landlord or the transferee to damages not
to exceed two hundred dollars ($200), in addition to any actual
damages.
   (g) This section is declarative of existing law and therefore
operative as to all tenancies, leases, or rental agreements for
other than residential property created or renewed on or after
January 1, 1971.