Your Guide To Laws Surrounding Landlord Fees And Charges in California
Landlords in California face a number of unique rules and laws regarding fees and charges. In order to be in full compliance with these laws, landlords should familiarize themselves with limits on bounced check charges, application fees, late rent charges, and other important fees you might have to impose on a tenant or applicant. Here is your guide to the sometimes confusing world of California fee limits and rules.
For most landlords, an application fee will be the first charge for any prospective tenant. After all, it takes time and effort to process an application, including credit and reference checks. However, California law indicates that you may only charge approximately $35 for application processing. At the same time, this law allows for some breathing room, as landlords can update this application fee based on the consumer price index of the closest metropolitan area. In other words, if you live in or near San Francisco, you can probably charge more.
You’re only permitted to request a deposit from your tenant equal to the amount of two months' rent when your apartment is unfurnished and three months' rent when the apartment is already furnished. However, you’re also allowed to increase this deposit amount if you increase the rent at some point.
If you charge a tenant and plan to take money from their deposit, according to California law, you must first provide the tenant with advanced written notice that you plan to deduct money from their deposit. After a tenant moves out, you must return the deposit along with a clear itemized list of any deductions you took from the tenant’s security deposit.
Late Rent Charge
If your tenant is late paying the rent, you’re permitted to fine them by charging a fee for sending late payment. However, California places limits on this charge as well. Basically, you must charge a fee based on a “reasonable estimate” that this late payment of rent would cost you in terms of time, money and hassle.
In other words, you probably shouldn’t charge a $500 late fee if your tenant is a day late on the $1,000 monthly rent for the first time. Try to establish with the tenant what late fees will look like early on, and make everything regarding late charges clear in the lease itself.
Bounced Check Fees
If your tenant sends you a check that bounces, you’re permitted to charge $25 the first time this occurs. Afterward, you’re allowed to charge $35 for every bounced check. Note that if you receive checks that bounce on a regular basis, you’ll probably have bigger problems with that particular tenant down the road.
Charging Regarding Keys
You’re required to provide an extra set of keys to the tenant at no charge. However, you may charge for any additional set of keys beyond that initial copy. It’s important to know that, under California law, landlords are not permitted to charge more than the documented cost it takes to actually make the set of keys.
If you decide to change the locks on an apartment door, you’re not permitted to charge the tenant for any new keys required to gain access. At the same time, if the tenant loses a set of keys, you’re permitted to use the deposit and then ask for a new refundable deposit for the new keys you have to provide.
Ultimately, being a landlord means being familiar with what sometimes feels like a countless number of laws. Hopefully, armed with the above information, you can ensure you stay within the letter of the law and avoid annoying issues regarding charges and fees.
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