Written Move-Out Notice
If a tenant decides to voluntarily move out, their notice should be in writing and should be personally served on you or mailed by certified mail. (CC § 1946.1.) In practice, many tenants mail the notice by ordinary first class mail, which is still legally effective so long as you receive it 30 or more days before the termination date. If tenants simply tell you that they will be leaving in 30 days or more, it’s good business to insist that the notice be in writing. Otherwise, you may have a problem if you sign a new lease agreement and the current tenants haven’t moved out yet.
Security Deposits Defined
California law defines a security deposit as any money you collect from a tenant other than a legitimate credit check fee or the first month’s rent, which you intend to use to cover unpaid rent or damage. (CC § 1950.5( b).)
Security Deposit as Last Month’s Rent
If a tenant asks that you apply their security deposit to their last month’s rent, don’t do it. You won’t know the condition of the property after they leave so if you apply the security deposit to last month’s rent, there may not be enough money left over to fix issues. If the tenant doesn’t pre-pay the last month’s rent, serve them a 3-Day Notice to Pay Rent or Quit and file an eviction lawsuit if the tenant doesn’t pay.
Accepting Further Rent After Giving a 30-/ 60-Day Notice
If you accept rent for any period beyond the termination date, you cancel the termination notice and create a new tenancy. This is true whether your tenant gave you a 30-day notice or you gave the tenant a 30-day or 60-day notice.
Initial Move-Out Inspection and Tenant’s Right to Receipts
Tenants are entitled to a pre-move-out inspection, when you or your manager tell the tenant what defects, if any, need to be corrected in order for the tenant to optimize the security deposit refund. You are required to conduct this inspection if the tenant requests it. (CC § 1950.5( f).)
You do not need to notify the tenant of a right to be present at a move-out inspection if you have served a three-day notice to pay rent or quit (or other three-day or unconditional quit notice based on some other breach), or if you are evicting on that basis. The need to tell the tenant of a right to be present at an initial move-out inspection applies only where the tenant should be leaving because you or the tenant gave the other a 30-day or 60-day or other regular notice of termination of tenancy— one that was not associated directly with a tenant’s misconduct— or where a fixed-term lease expires and is simply not being extended. (CC § 1950.5( f)( 1).) All tenants, however, are entitled to receipts and invoices for deductions, as explained below.
Here are the fine points you’ll need to know regarding receipts:
- Applies to all tenants. This law applies to tenants who leave as a matter of course at the end of a lease; to month-to-month tenants whose tenancy has terminated voluntarily or after receiving a 30- or 60-day notice from you; and to tenants who leave (or are evicted) following a termination for wrongdoing, such as nonpayment of rent.
- Minimum amount. The rule requiring receipts does not apply if the total deductions are $ 125 or less.
- Materials you buy in bulk or on an ongoing basis. If you deduct for a particular item that you purchase on an ongoing basis (such as rug shampoo that you buy regularly and in bulk), you must supply an invoice that documents the cost of the item, and figure the tenant’s share.
- Labor done by you or your employee. Your statement must describe the work, the time spent, and include a reasonable hourly rate.
- Labor done by others. If the receipts and/ or invoices for labor done by someone other than you or your employee( s) do not provide the name, address, and phone number of the person or entity who did the labor, you must provide that in (or on a sheet attached to) the itemization.
- When you can’t finish the job within 21 days of the tenant’s departure or don’t have invoices. If you can’t reasonably complete a repair within 21 days of the tenant’s departure, or if you don’t yet have the documents from a repairperson or company documenting the repair, you may deduct a good-faith estimate of the eventual costs. You must, however, give the tenant the repairperson’s name, address, and phone number. Within 14 days of getting the invoice, you must send it to the tenant in the same manner that you sent the original itemization.
Notifying Tenants of Initial Move-Out Inspection
You should mail your tenants a Move-Out Letter that advises them of their right to an initial move-out inspection and to be present at it. If a tenant gives you notice that they are moving out, be sure to mail the Move-Out Letter within a few days after receiving the notice.
Example Move-Out Letter
- Move-out Letter (Nolo) RTF Format
Example Form – Tenant’s Response Regarding Initial Move-Out Inspection
- Tenant’s Response Regarding Initial Move-Out Inspection (Nolo) RTF Format
Example Form – Tenant’s Waiver of Right to Receipt and Invoices
- Tenant’s Waiver of Right to Receipts and Invoices (Nolo) RTF Format
What to Do When the Tenant Gives Less Than 30 Days’ Notice
A tenant may mail the notice two weeks before vacating, or may just say good-bye while handing you the keys. But a tenant’s written termination notice isn’t ineffective just because it gives you less than the full 30 days’ notice. It is still a valid notice of termination, but you are entitled to rent money for the entire 30 days from the date of the notice. (There is one restriction on your right to the rent: If the tenant moves out less than 30 days after the notice is served, you must try to rerent the property before you can charge the tenant for giving you too little notice.
Basic Rules for Returning Deposits
The law allows you to make certain deductions from a tenant’s security deposit, provided you do it correctly. The basic rule is this: Within 21 days after a tenant who has paid a deposit leaves— whether voluntarily, by abandonment, or by eviction— you must mail the following to the tenant’s last known address, or forwarding address if you have one:
- the tenant’s entire deposit, or
- a written, itemized accounting of deductions for back rent and costs for necessary cleaning and damage repair, including receipts for labor and materials, together with a check for any deposit balance. (See CC § 1950.5( g).)
Also, if a landlord does not itemize deductions from the deposit as legally required, the landlord will not be allowed to assert claims for damages or unpaid rent against the deposit, if and when the tenant sues for the return of the entire deposit.
When You’ve Evicted the Tenant
Even if you win a judgment in court against a tenant for several months’ unpaid rent— more than the amount of the deposit— you still must notify the tenant in writing within three weeks after the tenant departs as to how you applied the deposit toward cleaning or damage charges, along with receipts, and the court judgment for rent.
Give Notice of Your Inspection
If the tenant requests an inspection, you or your manager should contact the tenant to arrange for a date and time for the inspection to take place. The inspection must occur no sooner than two weeks before the anticipated move-out date. If you can’t agree on a time, you still need to conduct an inspection, and you will just have to select a date and time yourself.
Conduct and Document the Inspection
Whether you do the final inspection in the tenant’s presence or not, we suggest that you do a thorough job. Bring two copies of the Landlord/ Tenant Checklist that you (hopefully) filled out (and both signed) when the tenancy began (you’ll need two because one must be left with the tenant). If you didn’t use this checklist at the beginning of the tenancy, use it now (obviously, you’ll need to leave the first column blank).
Example Initial Move-Out Inspection
- Move-In / Move-Out Checklist (Nolo) RTF Format
Example Form – Notice of Tenant’s Security Deposit Rights
- Notice of Tenant’s Security Deposit Rights (Nolo) RTF Format
When you’ve finished the inspection, you and the tenant should sign the checklist at the end, in the space provided for the Initial Move-Out Inspection. Getting the tenant’s signature here will establish, should you ever need to prove it, that you did indeed conduct the inspection.
Deducting for Additional Damage or Repairs
California law specifically allows you to make proper deductions that you haven’t noted during the initial inspection, as long as the damage or uncleanliness appeared after the inspection and before the end of the tenancy. Similarly, you can deduct if the problem was not identified during the inspection due to the presence of a tenant’s possessions. (CC § 1950.5( f)( 5).)
Consequences of Not Doing an Initial Move-Out Inspection
The initial inspection is critical to protect your rights to take damage and cleaning deductions from the deposit. If you don’t comply with the initial move-out inspection requirements, you may find yourself in small claims court, sued by tenants who disagree with the deductions from their deposit and are righteously angry that they didn’t get a chance to address the deficiencies. Experience shows that many small claims judges (who decide nearly all the deposit disputes) will not permit the landlord to take any deductions for damage or cleaning unless the landlord actually conducted an initial inspection, with items noted, or obtained a signed waiver of the inspection from the tenant.
As soon as possible after the tenant has vacated the rental, you or your manager and the tenant should conduct a final inspection. Pull out your Checklist again and go over the unit, noting any deficiencies in the “Condition on Departure” column.
You should photograph or videotape the premises before the tenant moves in. You should do the same when the tenant leaves, to make before-and-after comparisons.
Court Judgments for Unpaid Rent
If you sue to evict and obtain a judgment for rent through the date of the judgment, you can subtract:
- the amount of judgment, and
- prorated rent for the period between the date of the judgment and the date the tenant actually leaves.
Before you subtract the amount of a court judgment for unpaid rent, deduct for cleaning and damage costs and any rent not included in the judgment. The reason is simple: A judgment can be collected in all sorts of ways— for example, you can garnish the former tenant’s wages or attach a bank account— if the security deposit is not large enough to cover it. However, you are much more limited when it comes to collecting money the tenant owes you for damage and cleaning if you don’t have a judgment for the amount. If you don’t subtract them from the deposit, you’ll have to file suit in small claims court. But if you subtract the amount for cleaning, damage, and any unpaid rent not covered in the judgment first, you will still have the judgment if the deposit isn’t large enough to cover everything.
Preparing an Itemized Statement of Deductions
You must send the tenant a written itemized explanation of any deductions within three weeks after a tenant who has paid a deposit leaves. You must also supply receipts and invoices unless the tenant has waived the right to receive these documents. We have included three forms, which vary according to the types of deductions you are making.
Example Letter for Returning Entire Security Deposit
- Letter for Returning Entire Security Deposit (Nolo) RTF Format
Example Security Deposit Itemization
- Security Deposit Itemization (Nolo) RTF Format
Mailing the Security Deposit Itemization
Mail your security deposit itemization to the tenant’s last known address or forwarding address, along with a check for any balance you owe, within three weeks of the tenant’s departure. If the tenant hasn’t left you a forwarding address, mail the itemization and any balance to the address of the rental property itself. That, after all, is the tenant’s last address known to you.
You and the tenant may agree that you can deposit the remaining portion of the tenant’s security deposit electronically to the tenant’s account at a bank or another financial institution. You can also agree to provide the tenant the itemized statement of deductions by email. If you and the tenant agree to either or both of these options, the agreement should be in writing.
When a Tenant May Sue
Because virtually all residential security deposits are less than $ 10,000, almost all such suits are brought in small claims court ($ 10,000 is the maximum award available in California small claims court).
A tenant may file suit three weeks after leaving the premises if the tenant doesn’t receive a deposit refund (with an itemization of what the deposit was used for) and accompanying receipts and invoices. If you return part of a deposit sooner than three weeks, a tenant who does not agree with your charges will most likely express that dissatisfaction by way of a letter or phone call demanding that you refund more than you did. This sort of demand is a requirement before anyone can begin a small claims suit. (CCP § 116.4( a) requires a person suing in small claims court to state under penalty of perjury that the claimant “has demanded payment.”)
After making a demand, the tenant can bring suit immediately. A tenant who is going to sue will probably do it fairly promptly, but has at least two years to do so. The statute of limitations for a tenant’s suit to recover a security deposit is two years if a landlord’s failure to refund a deposit is viewed as a breach of an oral agreement (CCP § 339). Tenants have four years if a written lease or rental agreement is involved and a judge decides that failure to return a deposit is such a breach. (CCP § 337.) Don’t throw out any photos showing damage or dirt— you may need them.
Try to Settle a Potential Lawsuit
If you arrive at a compromise settlement with your former tenant, you should insist that your payment be accepted as “full satisfaction” of your obligation to return the deposit. The term “full satisfaction” simply means that this is the end of the matter, and that the tenant agrees not to demand any more money (any subsequent lawsuit for more money would probably be thrown out).
Example Settlement Agreement
Handling, Storing, and Disposing of Personal Property
Whether a tenant vacates voluntarily or with the aid of the sheriff or marshal, landlords all too often must not only clean up and repair damage, but also dispose of a pile of junk. You’re much more likely to face this problem when the tenant was evicted and wasn’t allowed to take everything. The belongings of evicted tenants are not put into the street. The law enforcement officer performing an eviction will allow the tenant to carry out a few armloads of personal possessions, leaving the remainder to be locked in the premises and stored by you until the tenant can arrange to take them away.
When Tenants Demand Their Property
By all means, if tenants are willing to pick up their property, return everything, even if they owe you money. If a tenant owes you money— for example, back rent— you cannot insist that he pay you before you return his property. You can, however, deduct back rent from any security deposit. But remember that the basic rule for returning deposits within three weeks after the tenant leaves applies in situations where the tenant has abandoned— regardless of whether the tenant has left property behind.
There’s one exception, however: You may insist the tenant pay your costs of moving and storing the property before you return it. If you’ve kept the property on the premises the tenant vacated, you have the right to insist on being paid the prorated daily rental value for keeping the property on your premises and/ or any out-of-pocket costs you incur after that for renting storage space. You can also subtract the value of your time for packing the tenant’s property up in the first place.
Under state law (CC § 1965), a landlord who fails to promptly return a tenant’s belongings may be liable for the value of the property plus $ 250 and the tenant’s attorneys’ fees. The process by which tenants demand their property is supposed to work this way:
- The tenant moves out, leaving personal belongings behind.
- Within 18 days, the tenant writes the landlord demanding the return of the property.
- Within five days after receiving the tenant’s demand, the landlord must either return the tenant’s property or notify the tenant by letter (addressed to the tenant at the return address specified in the demand letter) itemizing in detail the amount of moving and/ or storage charges, which the landlord demands as a condition of returning the tenant’s property. (As stated above, however, we think it’s less hassle to simply return the property, without insisting on moving or storage charges.)
- The tenant then has three days to pay the landlord’s moving and storage charges (if any) and reclaim the property.
If the tenant does not reclaim the property after all this, the landlord will not be liable under state law.
When Tenants Don’t Demand Their Property
Tenants who are truly interested in keeping their belongings usually won’t leave anything behind. (Even tenants evicted by the sheriff or marshal usually manage to move themselves and their belongings out a day or two before the scheduled eviction date.) So, when a tenant leaves personal property, it’s usually junk that has been intentionally left behind. Unfortunately, you can face serious liability for disposing of the junk, unless you use a Notice of Right to Reclaim Abandoned Property, as shown below. (See CC § § 1980– 1991.)
If, after a tenant has left, you discover property in addition to obvious trash or garbage, follow these steps:
- Step 1. Take an inventory of the abandoned property and write down a list of everything you find. An objective witness (tenant or neighbor) is valuable here if you want to protect yourself from any charge that you have not done this honestly. Don’t open locked trunks or suitcases or tied boxes; just list the unopened container. You may, however, open other containers to check for items of value, since your method of disposing of the property depends on its total value.
- Step 2. Decide whether the value of all the property— what you could get for it at a well-attended flea market or garage sale— is more than $ 700.
- Step 3. Regardless of the items’ value, send the tenant a Notice of Right to Reclaim Abandoned Property. There is no time limit for doing this, but you may not legally dispose of the property until you begin the process with this notice. A sample is shown below.
On the Notice of Right to Reclaim Abandoned Property, ensure you include:
- a description of the property. If there are too many items of property to list on the form, you can list them on a separate sheet of paper labeled “Attachment A.” The property must be described “in a manner reasonably adequate to permit the owner of the property to identify it.” (CC § 1983( b).) Merely describing it as “household goods” is insufficient
- a place where the tenant can claim the property
- the value of the property, by checking the appropriate box on the form as to whether the property, in your opinion, is worth more or less than $ 700
Mail the notice to the tenant’s last known residence, which will, of course, usually be the address of your residential rental property. The postal service will forward the notice if the tenant has left a forwarding address. You must surrender the property if the tenant contacts you within 18 days after you mailed the notice. If you haven’t mailed a notice, you must surrender the property within 18 days after the tenant has left.
Don’t demand more than moving and storage charges. Even if the tenant owes you a substantial sum for back rent or damages, you may not insist on payment of that amount as a condition of returning the tenant’s property, even if you’ve obtained a court judgment. In order to properly keep the property to have it sold and applied against such a judgment, you must have the sheriff seize the property and auction it off. The costs of doing this may exceed the value of the property, however.
Example Notice of Right to Reclaim Abandoned Property
- Notice of Right to Reclaim Abandoned Property (Nolo) RTF Format
Fixtures Belong to You
If a tenant attaches something more or less permanently to the wall, such as bookshelves bolted or nailed in, it is called a “fixture.” The general rule, in the absence of a lease provision or later agreement between you and the tenant that provides otherwise, is that a fixture installed by the tenant becomes a part of the premises and belongs to the landlord.
Property Worth Less Than $700
If your former tenant or other owner of the property left behind doesn’t contact you within 18 days of your mailing the Notice of Right to Reclaim Abandoned Property, you may keep, sell, give away, use, or do anything else you wish with the property, if it is all worth less than $ 700. (CC § 1988.) In other words, it’s yours. To recover from you for wrongfully disposing of the property, the tenant would have to convince a probably skeptical judge that the property was worth over $ 700 and that your belief that it was worth less was unreasonable.
Many landlords routinely put all the material left behind by the tenant, when the total value obviously does not exceed $ 700, in large plastic bags, which they tag and keep in their own storage room for six months or so. A few times a year, they give everything that hasn’t been claimed to Goodwill Industries, the Salvation Army, or some other nonprofit organization that operates secondhand stores.
Property Worth More Than $700
Very seldom will a departing tenant leave behind personal effects worth more than $ 700. Indeed, one management company that handles several thousand units, and has done so for 30 years, tells us that they have only had this occur once. In the rare event this does occur, you must arrange for the property to be sold at a public auction, and you must publish a notice in the newspaper announcing the auction. (CC § 1988.)
Motor Vehicles Left Behind
Occasionally, a departing tenant will leave an inoperable “junker” automobile in the parking lot or garage. Motor vehicles are a special category of personal property to which the procedures listed above do not apply. If the tenant has used the street in front of your property, or the property itself, as a junkyard, you should call the local police, giving the vehicle’s license number, make, and model, and indicate where it’s parked. If the car is parked on the street, the police will arrange to have it towed away 72 hours later, placing a notice to that effect on the windshield. (Vehicle Code § 22651( k).) If the vehicle is parked on your property, you can arrange to have it towed away within 24 hours after notifying the police, if the vehicle “lacks an engine, transmission, wheels, tires, doors, windshield, or any other major part or equipment.” (Vehicle Code § 22658( a)( 3).) Otherwise, the police may still arrange for the vehicle’s removal after an officer determines it is abandoned and tags it. (Vehicle Code § § 22523( b) and 22669.)