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The maximum deposits a landlord or property manager can ask is 2 months fo rent for an unfurnished unit, 3 months for a furnished one.
After a tenant moves out, the landlord or property manager must return the deposit (minus any deductions) within 21 days of move out. They must also include an itemized list showing what the withheld portion of the deposit was spent on. If the tenant requests it, the landlord or property manager must provide receipts for the listed deductions within 14 days of the request.
Deposit money can only be used to make up unpaid rent, or to bring the unit back to the condition it was in when the tenant initially moved in. For this reason, it’s good practice to have an initial inspection with the landlord upon move in, or to take pictures of the rental at the beginning of a tenancy. However, the deposit cannot be used to repair or clean issues that arise out of normal use of a residence aka “normal wear and tear.” For example, a tenant moves into a unit with new carpet and after several years the carpet becomes worn down and more discolored in high traffic areas, the landlord cannot charge the tenant to replace the entire carpet. However, if for example the tenant’s dog chewed on or dug at a section of the carpet and tore it up, the kind of damage could be addressed with security deposit money.
Tenants have a right to a walkthrough inspection of their rental unit with their landlord or property manager, in the last two weeks of their tenancy. The purpose of such an inspection is to agree on which issues in the unit are the tenant’s responsibility to fix or clean (again, not normal wear and tear). The tenant then has the option to fix or clean those issues on their own before moving out. Any issues that the tenant does not address can then be paid for out of the security deposit. However, issues that the landlord or property manager charges to the tenant’s security deposit that were NOT acknowledged during the walkthrough can be contested.
Periodically, local governments in Santa Cruz county set interest rates on security deposits. The interest collected on deposits must be returned with the rest of the deposit, minus allowable deductions. As of 3/13/2020, the security deposit interest rate in the City of Santa Cruz is 0.01%