Preliminary Move-Out Inspections: Don’t Lose Your Right to Withhold Security Deposit Funds!

Suppose your tenants, who’ve lived in your property for the last two years, have just given written notice of their intent to vacate in sixty days' time. You haven’t been in the unit since last year’s RHSP Inspection, at which time you noted they weren’t the best at housekeeping. The stove top was greasy, the kitchen walls were food splattered, the floors needed mopping, and they had a lot of framed art hanging on their walls throughout the unit, violating your “no holes in the walls” rule. Understandably, you have concerns about the condition they’ll return the unit in and how much it will cost to prepare the unit for re-rental.  You might be thinking, “Thank goodness I have their security deposit!” You might not know that you cannot withhold any part of their security deposit unless you follow the law.

California Civil Code 1950.5, which governs security deposits, states that tenants have the right to an inspection prior to moving out, aka “Preliminary Inspection,” no earlier than two weeks prior to the termination date of the lease. From the tenant's perspective, this means that they’ll have the opportunity to remedy any defects before moving out to prevent deductions from their deposit. It’s also step one for the landlord to have the lawful right to withhold funds for damages, but it’s only step one, so what is step two? After you have conducted the inspection, you must furnish the tenants with an itemized statement of all damages and the associated costs to remedy them. This isn’t always easy to calculate, but unless you intend to withhold $125.00 or less, it is mandatory to provide figures with your description of the damages. You only have 21 days from their move-out date to refund their deposit funds, including a letter of disposition and receipts for repair work, so you must be prepared to act immediately. On the rare occasion that a tenant elects to waive their right to this inspection, you’ll still need to furnish them with a deposit disposition and receipts unless you’re withholding $125 or less.

To start the ball rolling on the preliminary inspection, once you’ve received a move-out notice, serve your tenants with the Notice of Right to Inspection Prior to Termination of Tenancy, which can be found in our Forms library.

Having personally conducted oodles of preliminary inspections, here are a few helpful tips!

• Be prompt. Everyone deserves to have their time respected.
• Have a copy of their Move-In Condition checklist with you!
• Have your Move-In Condition photos handy for reference!
• Know what your handyman charges as their hourly rate
• Clearly communicate your expectations!
• Understand that you cannot deduct for “Ordinary Wear & Tear”
• Take photos and written notes; don’t rely on your memory.

After the inspection, gather your notes and photos and draft a letter to your tenants. Explain your observations, communicate your expectations, create a statement of the needed work, and estimate the cost if you intend to do the work yourself.

If you need more guidance or have questions on how to perform the preliminary move-out inspection, please contact tiffany@bpoa.org or 510-525-3666.