Probably two of the most asked questions when returning security deposits is: “Can I charge my tenants for carpet cleaning and painting?” and “Must I pay interest on my security deposit?” This article will address those questions.
Charging a security deposit for carpet cleaning and painting depends on how long the tenant occupied the premises and in what condition the walls and carpet were left. Below is information that is listed by the California Department of Consumer Affairs, (www.dca.ca.gov) regarding deductions on these specific items.
Carpets and Drapes – “Useful Life” Rule
“A landlord cannot routinely charge each tenant for cleaning carpets, drapes, walls, or windows in order to prepare the rental unit for the next tenancy. Also, “normal wear and tear” to carpets, drapes and other furnishings cannot be charged against a tenant’s security deposit.Normal wear and tear includes simple wearing down of carpet and drapes because of normal use or aging, and includes moderate dirt or spotting.
In contrast, large rips or indelible stains justify a deduction from the tenant’s security deposit for repairing the carpet or drapes, or replacing them if that is reasonably necessary.
One common method of calculating the deduction for replacement prorates the total cost of replacement so that the tenant pays only for the remaining useful life of the item that the tenant has damaged or destroyed. For example, suppose a tenant has damaged beyond repair an eight-year-old carpet that had a life expectancy of ten years, and that a replacement carpet of similar quality would cost $1,000. The landlord could properly charge only $200 for the two years’ worth of life (use) that would have remained if the tenant had not damaged the carpet.
One approach for determining the amount that the landlord can deduct from the tenant’s security deposit for repainting – (when repainting is necessary), is based on the length of the tenant’s stay in the rental unit. This approach (listed below) assumes that interior paint has a two-year life. (Some landlords assume that interior paint has a life of three years or more.)
[Editor’s Note: The two-year approach below is based on the California Department of Consumer Affairs. The law is unclear on this and unfortunately, not cut and dry. Some professionals state that a three-year expected life span for flat paint is not unreasonable in most rental tenancies. Others claim that a high-gloss paint has a life span of “several” years. Only a judge in Small Claims court, however, can make the call on specific cases of higher deductions if disputed.]
Length of Stay Deduction
Less than 6 months Full cost
6 months to 1 year Two-thirds of cost
1 year to 2 years One-third of cost
2 or more years No charge
Using this approach, if the tenant lived in the rental unit for two years or more, the tenant could not be charged for any repainting costs, no matter how dirty the walls were.”
Other Damage to Walls
Generally, minor marks or nicks in walls are the landlord’s responsibility as normal wear and tear (for example, worn paint caused by a sofa against the wall). Therefore, the tenant should not be charged for such marks or nicks.
However, a large number of holes in the walls or ceiling that require filling with plaster, or that otherwise require patching and repainting, could justify withholding the cost of repainting from the tenant’s security deposit. In this situation, deducting for painting would be more likely to be proper if the rental unit had been painted recently, and less likely to be proper if the rental unit needed repainting anyway. Generally, large marks or paint gouges are the tenant’s responsibility.
Remember: These suggestions are not hard and fast rules. Rather, they are offered to help tenants and landlords avoid, understand, and resolve security deposit disputes. Overreaching by one party only invites the other party to take a hard line. Disputes that reach this level often become unresolvable by the parties and wind up in court.”
Interest on Security Deposits
If your building is in one of the nine cities listed below, you must pay interest on the security deposit once a year and at the end of the tenancy. The cities ofWatsonville andSanta Cruz do not have rent control, however, they also require you pay interest on security deposits once a year. The interest rates for each city fluctuate annually, so be sure to get the new rate each year from your local rent control board or by calling the city.
Penalties – Some cities have set penalties for the landlord’s non-compliance to the rule of paying interest. The cities and their penalties are:
- Berkeley – If not paid by January 10th each year, the tenant may deduct the interest at a rate of 10% from their next rental payment
- Hayward – Landlord can be subject for three times the amount of unpaid interest owed
Interest Bearing Accounts – East Palo Alto and Santa Monica require that you keep all security deposits in a separate interest bearing account and also require that the account be insured by FLIC or FDIC. In some cities, if these accounts pay less interest than what you are required to pay your tenants required by the rent control ordinances, you only have to pay the interest that the bank is paying you. Please be sure to check with your city for exact pay-out requirements.
Below is a list of cities and their requirements regarding interest to be paid on security deposits that are held over one year:
Interest Payments Due
Interest Bearing Account
|Berkeley||In December of each year||Not required|
|East Palo Alto||In December of each year||Required -insured by FSLIC or FDIC|
|Hayward||On move-in anniversary date||Not required|
|Los Angeles||Once a year||Not required|
|San Francisco||On move-in anniversary date||Not required|
|Santa Cruz||On move-in anniversary date||Not required|
|Santa Monica||By October 1st each year||Required -insured by FSLIC or FDIC|
|Watsonville||On January 1 each year||Not required|
|West Hollywood||In Jan or Feb each year||Not required|
How Should You Pay Interest?
Payments may be made by check or a rent credit, but either way, you should pay or notify your tenants of the rent credit on or before the specified date set by each city AND at the end of their tenancy which you must include on the security deposit refund form.
Patricia A. Harris is Senior Editor of the Apartment Owners News & Buyers Guide. This article is a general guide and has no legal representation. It is suggested that you contact an attorney for legal advice should the need present itself.
ARTICLE CORRECTION – There is a correction to the article from the February 2014 issue titled “Security Deposit Refunds: Carpets, Painting and Interest. On the list of cities requiring interest to be paid, buildings in Santa Monica lists interest payments due by October 1st of every year. CORRECTION: Santa Monica does not require landlords to pay interest on security deposits. AOA apologizes for this error and any inconvenience it may have caused.