As of a few weeks ago, life got a little harder for landlords in California. Soon, you'll only be able to charge one month's rent for security deposits.
As annoying as this may seem, it's not the end of the world. In places like San Mateo, even a smaller deposit can cover most damages. Provided, of course, that you remember to send the security deposit disposition form.
Not sure what a security deposit disposition form should look like? Here's everything you need to know about these forms and when to send them!
What Is a Security Deposit Disposition?
The security deposit disposition is a form you'll send to tenants who move out. It lets them know how much you'll deduct from their security deposit.
Once a tenant's rental agreement ends, you'll do the move-out walkthrough. During the walkthrough, take note of the repairs you'll need to make. You'll need this information on file in case tenants disagree about the costs.
Once you have everything you need, fill out the disposition form and send it to your tenant. In California, you need to do it within 21 days of them moving out. Otherwise, you'll leave yourself open to the tenant suing you.
Allowable Deductions
When it comes to security deposits, you need a valid reason for every deduction. In California, the security deposit deductions list includes:
- Cleaning the rental unit once the tenant moves out
- Repairing damage caused by the tenant
- Replacing or restoring furniture or other personal items
It's worth noting that deductible damage doesn't include normal wear and tear. For example, you can't deduct money for chipped paint on a wall. Some things you can use a security deposit to repair are:
- Stained carpet
- Broken locks
- Broken windows
- Pet damage cleanup
- Clogged drain
- Broken appliances
What Should a Disposition Form Look Like?
The deposit disposition form doesn't need to look too fancy. All you need is a single page containing basic information and an itemized list of deductions.
The information you need to include is the date, tenant name, and rental address. Note the amount received as a deposit and divide the list of deductions into key categories. These categories include:
- Repair damages
- Replacement of furnishings
- Necessary cleaning
- Other deductions
Once you add it all up, you'll either owe the tenant or they'll owe you. If it's the former, note how much of the deposit remains after deductions. If it's the latter, list the amount the tenant still owes you for repairs.
Before sending the form to the tenant, you must establish evidence of mailing. The best way to do that is to send the letter via certified mail. This prevents the tenant from claiming they didn't receive the letter.
Security Deposit Dispositions and You
The security deposit disposition form is crucial when you're not returning the entire deposit. Filling it out correctly helps ensure that both parties will stay on the same page.
Want to leave deposit dispositions to professionals? If you live in San Mateo, CA, our property management experts at Five Star can draft and mail this form for you! Contact us here to learn more about our services!