Answers to your common questions
Commercial: Maybe. The statute doesn't contain the same explicit prohibition as Section 1950.5. Thus, it would be up to a court to decide if a nonrefundable security deposit would be deemed unreasonable in a non-residential context. (Cal.Civ. Code § 1950.7(c).)
Commercial: A security deposit is defined to be "any payment or deposit of money the primary function of which is to secure the performance of a rental agreement. . . including an advance payment of rent". (Cal.Civ. Code §1950.7(b).)
Residential: Residential landlords may collect a security deposit not to exceed the monetary equivalent of 2 months rent for unfurnished units, and 3 months rent for furnished units. For example, for an unfurnished residential property at $800 per month, the maximum amount that the landlord can collect up front is $2,400: This consists of $800 rent for the first month, plus $1,600 as a security deposit. If the landlord charges any other general processing fee or pet deposit or cleaning deposit, that amount is considered part of the $1,600 security deposit. (Cal.Civ. Code §1950.5(b).)
The landlord may not collect or demand any additional amount of money at the beginning of the tenancy, except as follows:
- A landlord is permitted to increase the deposit by one-half of one month's rent when a landlord is accepting a tenant with a waterbed or water-filled furniture. (In that situation, the landlord is also permitted to charge a reasonable fee for administrative costs, and can require the tenant to provide waterbed or water-filled furniture insurance.) (Cal.Civ. Code §§1950.5(c).1940.5(g).)
- In addition to the security deposit, a landlord may collect the first month's rent in advance.
- A landlord may collect six months or more of advance rent payment on leases of at least six months duration. (Cal.Civ. Code §1950.5(c).) Collecting two, three, four or five months of advance rent would violate the law.
- A landlord may charge a nonrefundable application screening fee for actual, out-of-pocket costs for obtaining information about a rental application, such as credit reports and reference checks (Cal.Civ. Code § 1950.6(j).) See Question 3 below for additional details.
- A landlord may include additional charges if there is a separate mutual fee agreement between the landlord and tenant for structural, decorative, furnishing, or other similar alterations, but not for cleaning or repairs (Cal.Civ. Code § 1950.5(c)).
Armando Ramos & Associates
1731 Howe Ave #245
Sacramento, Ca 95825
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