CA increasing security deposit from $0

[Michael Chong]

Hello All!

New to investment properties, recently bought a 8-unit multifamily. There are two tenants with $0 Security Deposit and I have questions on how to collect the full amount equal to the rent. 

The tenant was a property manager for the old owner with a low rent and $0 security deposit. I recently gave her the 60 day notice to increase rent and forgot about increasing the security deposit together.

She's on a month-to-month from a lease contract that ended 6 years ago. Her security deposit clause reads:

SECURITY DEPOSITS: The Security Deposit shall not exceed two times the monthly rent for unfurnished apartments or three times the monthly rent for furnished apartments. The total of the above deposits shall secure compliance with the terms and conditions of this agreement and shall be refunded to RESIDENT within 21 days after the premises have been completely vacated less any amount necessary to pay OWNER: a) any unpaid rent, b) cleaning costs, c) key replacement costs, d) costs for repair of damages to apartment and/or common areas above ordinary wear and tear, and e) any other amount legally allowable under the terms of this agreement. A written accounting of said charges shall be presented to RESIDENT within 21 days of move-out. If deposits do not cover such costs and damages, the RESIDENT shall immediately pay said additional costs for damages to OWNER. During the term of tenancy, RESIDENT agrees to increase the deposit upon 30 days written notice by an amount equal to any future increases in rent and/or an amount necessary to cover the cost of rectifying any damage or expense for which RESIDENT is responsible. Security deposit is not to be used as last month’s rent.

So with this clause, am I only allowed to increase her security deposit to the rent increase 60days notice that I gave her? which is $310?

or is it that because she's on month-to-month I can collect her whole security deposit equal to one month's rent?

thanks!

[Al Williamson]

@michael chong,

I would get rid of the previous onsite manager if at all possible. It's not good to have someone who thinks they have more seniority than you on your property.

There are a number of issues that may come up with the old onsite still hanging around and gossiping against new owners.

Yes - take away any privilege former manager had and, hopefully, they will leave.

The sooner the better.