Security Deposits

If you agree to rent an apartment, but are not going to move in immediately, the landlord may ask you for a holding deposit. This is a cash deposit to hold the rental unit, usually for a stated amount of time, until you pay the first month's rent and any security deposits. If you change your mind about moving in, the landlord may be able to keep your deposit.

Ask the following questions before paying any deposit.

• If you decide to rent the unit, will the holding deposit be applied to the first month's rent? If so, ask the landlord for a deposit receipt that states this. Applying the deposit to the first month's rent is a common practice.
• Is any part of the holding deposit refundable if you change your mind about renting? As a general rule, if you change your mind (for whatever reason), none of the deposit is refunded. If you and the landlord agree that all or part of the deposit will be refunded, make sure that these terms are in writing.

Landlords are allowed to charge a security deposit, and almost all landlords do in San Francisco. The security deposit may be labeled "last month's rent," "security deposit," or "cleaning deposit," or may combine the last month's rent plus a specific amount for "security" in the event of damage to the rental unit.

Regardless of what the security deposit is called, state law limits the amount a landlord can charge. The total amount charged for any type of security deposit cannot be more that the amount of two months' rent for an unfurnished rental unit or three months' rent for a furnished unit. The landlord typically will require you to pay this amount in addition to your first month's rent.

The San Francisco Rent Control Ordinance requires landlords to pay simple interest on security deposits held for at least one year, unless rent is subsidized by any government agency.

Security deposits are refundable under California law. The law, however, allows landlords to retain part or all of your deposit under certain circumstances. They include compensation for:

• outstanding (unpaid) rent
• cleaning the rental unit after you moved out, if the unit was not as clean as when you moved in
• repairing damages caused by you or your guests, exclusive of normal wear and tear
• replacing or restoring furniture, furnishings, keys, or other items belonging to your landlord, exclusive of ordinary wear and tear

Because you may be entitled to a refund of a portion or an entire security deposit, make sure that your rental agreement clearly states that the landlord received a security deposit from you and accurately reflects how much you paid. Within 14 days after you move, your landlord either must (a) send you a full refund of the security deposit or (b) an itemized statement that lists reasons for and amounts of any deductions from the deposit, with a refund of any amounts not deducted. Security deposit refunds also must include any unpaid interest if your rental unit falls under San Francisco's Rent Control Ordinance.