How much of a security deposit can I charge - Similarly, who holds onto the security deposit - cropped

From a practical standpoint, the answer to how much of a security deposit you can charge is determined by “what the market will accept.” As a general rule of thumb, we usually get an amount equal to the rental amount, and where we can, that amount plus another $200 – $300.

In today’s market, most often you will not be able to get first, last and security deposit because:

1.) this is not currently common in our area; and

2.) the combined total of these amounts may be fairly close to the amount a buyer needs for closing costs. When you combine this amount with certain types of financing, your prospective tenant may now be a prospective buyer.

Note: according to California State Civil Code Section 1950.5: 

•There is no such thing as a “nonrefundable” security deposit. No matter what it´s called-a key deposit, cleaning fee, move-in fee, closing costs, last month´s rent, etc.-all money paid in addition to the first month´s rent is defined as a security deposit.

•No matter what it´s called, the total amount the landlord can charge for all the deposits (including last month´s rent) is twice the amount of one month´s rent for an unfurnished place or three times one month´s rent for a furnished place.

Who holds on to the security deposit?

Most of our owners have us open a trust savings account at a local bank. The security deposit is placed into this account until the tenant moves out and the funds are needed for disbursement.

Other owners have us send them the security deposit to hold, which we will do if so directed. These owners are put on notice that the security deposit funds need to be available upon demand by the property manger and/or no later than 21 days after the tenant vacates the property.