Sacramento Report

Spending Tenants’ Security Deposits

by Debra Carlton

Beginning January 1, 2004, rental property owners must provide tenants with documentation when they use a tenant’s security deposit to pay for services or repairs to the rental unit. Below are some of the most common questions that owners and tenants have asked about this law.

Q. What do owners need to provide a tenant when they (the owner) use all or a portion of the tenant’s security deposit to make repairs or clean the unit?

A. The owner must provide the tenant with a copy of an itemized statement indicating the basis for, and the amount of, any security deposit received and the disposition of that security deposit. Along with the itemized statement, the owner must include copies of documents showing charges incurred and deducted by the owner to repair or clean the premises.

If the owner or the owner’s employee performs the work, the itemized statement must reasonably describe the work performed. The itemized statement must include the time spent and the reasonable hourly rate charged.
If the owner or the owner’s employees did not do the work, the owner must provide the tenant with a copy of the bill, invoice or receipt supplied by the person or entity that performed the work. The itemized statement must provide the tenant with the name, address, and telephone number of the person or entity, if the bill, invoice or receipt does not include that information.
If a deduction is made for materials or supplies, the owner must provide a copy of the bill, invoice or receipt. If a particular material or supply item is purchased by the owner on an ongoing basis, the owner may document the cost of the item by providing a copy of a bill, invoice, receipt, vendor price list or other vendor document that reasonably documents the cost of the item used in the repair or cleaning of the unit.

Q. What if the owner or the owner’s employees cannot complete work to the unit within 21 days?

A. If a repair to be done by the owner or the owner’s employees cannot reasonably be completed within 21 calendar days after the tenant has moved out, the owner may deduct the amount of a good faith estimate of the charges that will be incurred and provide that estimate with the itemized statement. Within 14 calendar days of completing the repair, the owner must provide documentation to the tenant that outlines the work performed (as described above).

Q. What if the contractor or vendor has not provided a copy of the bill, invoice or receipt within 21 days after the tenant has moved out?

A. If the documents from a contractor providing services, materials or supplies are not in the owner’s possession within 21 calendar days after the tenant has moved out, the owner may deduct the amount of a good faith estimate of the charges that will be incurred and provide that estimate with the itemized statement. On the itemized statement, the owner must provide the name, address and telephone number of the person or entity providing the service. Within 14 calendar days of the time that the owner receives the receipts, he/she must send that information to the tenant.

Q. Can the owner or the owner’s employees make the repairs or clean the unit and charge the tenant for that work?

A. Yes. The owner must provide the tenant with an itemized statement that reasonably describes the work performed, and the statement must include the time spent and the reasonable hourly rate charged.

Q. Can a tenant waive his right to receive the receipts?

A. A tenant may waive his right to receipts if he puts it in writing and if that written waiver is made at the same time, or after, either party serves a notice to terminate the tenancy (a 30- or 60-Day Termination Notice or a Three-Day Notice for Failure to Pay Rent or other lease violation) or no earlier than 60 calendar days prior to the expiration of a fixed-term lease. The waiver must include specific text from the law, informing tenants of their rights to receive copies of receipts.

Q. What if the owner spends a small amount of the tenant’s security deposit, does the owner still have to provide the tenant with a receipt?

A. No. If the owner spends $125 or less of the tenant’s security deposit, the owner does not have to provide receipts. (However, the tenant still has the right to request receipts in this situation, and the owner must provide them.)

Q. What if the tenant wants receipts even after she has waived her right to receive them?

A. Notwithstanding the tenant’s waiver or the $125 exemption (as outlined above), the owner must provide the tenant with receipts if the tenant makes a request for them within 14 calendar days after receiving the itemized statement. The owner must provide the receipts within 14 days after the tenant makes the request.

Q. Can the tenant waive the right to the itemized statement?

A. No. The law does not allow for a waiver of the itemized statement.

Q. Can the owner provide the tenant with invoices or other vendor documents prior to the time that the tenant moves from the property if the owner knows in advance what those charges will be?

A. Yes. The law makes a provision for the owner to provide the tenant with the documentation prior to the time the tenant moves out. The documents must be delivered to the tenant no later than 21 calendar days after the tenant has moved out, but not earlier than the time that either the owner or the tenant provides a notice to terminate the tenancy or not earlier than 60 calendar days prior to the expiration of a fixed-term lease.

Q. How is the owner required to give these documents to the tenant?

A. The owner can personally deliver the materials to the tenant or send them to the tenant by first-class mail, postage prepaid. The owner must send the documentation to the tenant at the address provided by the tenant. If the tenant does not provide an address, the documents can be sent to the unit that has been vacated.

The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the San Francisco Apartment Magazine. Debra Carlton is the Vice President of Policy and Research for the California Apartment Association and is CAA’s chief lobbyist. Copyright © 2004.