📋 Overview

You've received a demand letter from a former tenant claiming return of their security deposit. California Civil Code 1950.5 strictly regulates security deposits, including the amount you can collect, what you can deduct, and how quickly you must return the balance. This guide helps you evaluate whether your deductions were lawful and how to respond.

⚠ 21-Day Rule

You must return the deposit (or itemized statement of deductions) within 21 days of move-out. Missing this deadline creates serious liability.

🕒 Bad Faith Penalty

Bad faith retention can result in up to 2x the deposit amount in statutory damages, plus actual damages and attorney fees.

💰 Documentation Required

You must provide an itemized statement with receipts/invoices for any deduction over $125, or good faith estimates if work isn't complete.

What Can Be Lawfully Deducted

  • Unpaid rent - Including any rent owed through the end of the lease term
  • Cleaning costs - Only to return unit to same level of cleanliness as move-in (not "professionally cleaned")
  • Damage beyond normal wear - Holes in walls, stains, broken fixtures (not scuff marks or faded paint)
  • Restoration of unauthorized alterations - Removing unauthorized paint colors, fixtures, etc.
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Case review, professional response letter, documentation of lawful deductions. Protects against small claims court.

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🔍 Evaluate the Claim

Before responding, audit your own compliance with Civil Code 1950.5. Judges scrutinize landlord compliance carefully in deposit disputes.

Risk Assessment Matrix

Issue Consequence Risk Level
Missed 21-day deadline Lose right to deduct; possible bad faith damages HIGH
No itemized statement Deductions likely invalid; may owe full refund HIGH
Deducted normal wear and tear Invalid deduction; must refund that amount MEDIUM
No move-in/move-out inspection Hard to prove pre-existing damage vs. tenant damage MEDIUM
Excessive cleaning charges Only return to move-in condition; not "like new" LOW

📄 Documentation Review

  • ✓ Move-in inspection checklist (signed by tenant)
  • ✓ Move-out inspection checklist
  • ✓ Photos/video from move-in and move-out
  • ✓ Itemized statement mailed within 21 days

📝 Deduction Backup

  • ✓ Receipts/invoices for repairs over $125
  • ✓ Good faith estimates if work incomplete
  • ✓ Proof of unpaid rent (ledger, notices)
  • ✓ Age of damaged items (depreciation)

⚠ Normal Wear and Tear

California law prohibits deducting for "normal wear and tear." Examples include: minor scuff marks, small nail holes, worn carpet from normal use, faded paint, loose door handles. Judges are experienced at distinguishing normal wear from tenant damage.

🛡 Your Defenses

If your deductions were lawful, you have strong defenses. Document these thoroughly for any potential small claims hearing.

Documented Damage Beyond Normal Wear

Photos comparing move-in to move-out condition clearly show tenant-caused damage: large holes, stains, broken fixtures, unauthorized modifications. Each item is documented with dated photos and repair invoices.

When to use: You have strong before/after documentation and reasonable repair costs.

Unpaid Rent or Charges

Tenant owed rent, utilities, or other charges per the lease at move-out. Deduction is a direct offset against documented amounts owed.

When to use: Rent ledger shows amounts due; lease authorizes the charges.

Cleaning Required Beyond Normal

Unit required cleaning beyond normal wear: heavy grease buildup, pet odors, significant debris left behind. Move-in photos show unit was delivered clean.

When to use: You have evidence of move-in condition and professional cleaning was genuinely required.

Tenant Abandoned Before Inspection

Tenant did not request or attend move-out inspection despite being offered the opportunity, per Civil Code 1950.5(f).

When to use: You sent written notice offering inspection; tenant declined or failed to respond.

Depreciation Applied Correctly

Deductions account for useful life depreciation. For example, 5-year-old carpet damaged after 3 years = 40% deduction, not full replacement cost.

When to use: Challenged on repair amounts; show you applied reasonable depreciation.

🚨 Weak Defenses to Avoid

  • "Unit needed updating anyway" - You cannot charge tenant for improvements
  • "Standard practice in my area" - Must follow CC 1950.5 requirements
  • "They were difficult tenants" - Irrelevant to lawful deductions
  • "Lease says deposit is non-refundable" - Such clauses are void in California

⚖ Response Options

Based on your evaluation, choose the appropriate response strategy.

Provide Additional Documentation

If your deductions are lawful, respond with comprehensive documentation: photos, invoices, inspection reports. Often resolves the dispute without court.

  • Shows good faith
  • Strengthens court position
  • May satisfy tenant

Partial Refund + Documentation

If some deductions were borderline, refund those while maintaining defensible deductions. Reduces litigation risk.

  • Limits exposure
  • Shows reasonableness
  • May avoid court

Stand Firm

If deductions are well-documented and clearly lawful, maintain your position and prepare for possible small claims court.

  • Preserves your rights
  • Deters frivolous claims
  • Court time required

Full Refund

If you missed deadlines or documentation is weak, refunding may be cheaper than losing in court and paying 2x damages.

  • Ends dispute quickly
  • Avoids court costs
  • No bad faith finding

📊 Cost-Benefit Analysis: Defending vs. Settling

Example: $2,400 deposit, $1,800 deducted, tenant demands full refund

Amount in dispute $1,800
Your time for small claims (prep + hearing) 4-6 hours
If you lose: refund deductions $1,800
If bad faith found: statutory damages (2x) $4,800
MAX EXPOSURE IF YOU LOSE $6,600+

💡 Small Claims Considerations

In small claims court, judges often favor tenants in close cases. If your documentation is weak, consider settling for 50-75% of disputed amount. A bad faith finding doubles your exposure and may affect your ability to rent properties.

📝 Sample Responses

Customize these response templates for your situation.

Defending Lawful Deductions
I am in receipt of your demand letter dated [DATE] regarding the security deposit for [PROPERTY ADDRESS]. As required by Civil Code 1950.5, I provided you with an itemized statement of deductions within 21 days of your move-out on [DATE]. The deductions totaling [$AMOUNT] were for: [LIST ITEMS - e.g., "repair of holes in bedroom walls ($350), professional cleaning to address pet odors ($275), unpaid rent for March 2024 ($1,200)"]. Enclosed please find: (1) copies of the move-in and move-out inspection reports you signed, (2) dated photographs comparing move-in condition to move-out condition, and (3) invoices for all repairs exceeding $125. These deductions are lawful under Civil Code 1950.5(b) and I respectfully decline to provide additional refund. I am happy to discuss any specific concerns you have regarding the documentation provided.
Partial Refund Offer
I have reviewed your demand letter dated [DATE] concerning the security deposit for [PROPERTY ADDRESS]. After reconsidering, I am willing to refund an additional [$AMOUNT] for the [specific item - e.g., "carpet cleaning charge"], which upon reflection may be considered normal wear and tear. However, I maintain that the remaining deductions of [$AMOUNT] for [remaining items] are lawful under Civil Code 1950.5, as documented by the enclosed photographs and invoices. Enclosed is a check for [$AMOUNT]. I consider this matter resolved upon your deposit of this check. If you disagree, please contact me before pursuing further action so we can discuss.
Requesting Specific Objections
Thank you for your letter dated [DATE] regarding the security deposit for [PROPERTY ADDRESS]. I provided an itemized statement on [DATE] detailing deductions totaling [$AMOUNT]. Your letter does not specify which deductions you believe are improper. To address your concerns, please identify: (1) which specific deductions you dispute, (2) why you believe each disputed deduction is unlawful under Civil Code 1950.5, and (3) any documentation supporting your position (such as your own move-out photos). I am committed to resolving this fairly. Once I understand your specific objections, I can respond substantively.
Full Refund to Avoid Dispute
I am in receipt of your demand letter dated [DATE] regarding the security deposit for [PROPERTY ADDRESS]. While I believe my deductions were appropriate, in the interest of avoiding the time and expense of litigation, I am enclosing a check for [$AMOUNT], representing a full refund of your security deposit. Please confirm receipt and consider this matter closed.

🚀 Next Steps

How to proceed after receiving a security deposit demand letter.

Step 1: Audit Your Compliance

Verify you met the 21-day deadline and provided proper itemized statement with required documentation.

Step 2: Gather Documentation

Collect move-in/move-out photos, inspection checklists, invoices, and any communication with tenant.

Step 3: Assess Deductions

Review each deduction against CC 1950.5 requirements. Identify any that may be vulnerable.

Step 4: Respond in Writing

Send a written response within a reasonable time. Keep copies of everything you send.

If They File in Small Claims Court

  • Respond to the claim - Attend the hearing; default judgment will be entered if you don't appear
  • Bring all documentation - Originals of photos, invoices, inspection reports, and itemized statement
  • Be organized - Create a timeline and folder for the judge to review
  • Stay professional - Focus on facts and documentation, not emotions

Preventive Measures for Future

  • Detailed move-in inspection - Document condition with photos and signed checklist
  • Offer move-out inspection - Give tenant chance to fix issues before move-out
  • Use itemized statement template - Ensures you meet all CC 1950.5 requirements
  • Keep receipts - Maintain records for all repairs and cleaning

Get Professional Help

Security deposit disputes can be complex. Get a professional response letter to protect your interests.

Schedule Consultation - $450

California Resources

  • Civil Code 1950.5: leginfo.legislature.ca.gov - Full security deposit law text
  • CA Courts Self-Help: courts.ca.gov/selfhelp - Small claims court information
  • CA Dept. of Consumer Affairs: dca.ca.gov - Landlord-tenant resources