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Just got an email from a non-residential garage space landlord stating that our current yearly rent increase is due.

But it struck me as odd that they also added in a line that says

"The security deposit you paid when you first leased space in the building was based on a percentage of the monthly rent paid. If your monthly rent has moved into a new bracket, then you will see an amount below. This additional amount is due and payable with June’s rent. If the increase in your security deposit creates a financial burden, please see your building manager."

Is this legal in CA? From a cursory inspection of the law there are tight requirements on what the deposit can be used for and it doesn't have anything to do with a "percentage of rent". It's to pay for the repairs, which would not go up in cost as much even if the rent does. But IANAL. We've been tenants for 3 years and this is the first this has come up.

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  • They're not using the deposit for anything. They're increasing the amount you're required to keep on deposit because of the increase in the rent. Just like the original deposit amount, you'll get it back at the end of the lease period, less any charges. One use of deposits is to cover underpayments in the last rental period, which helps to explain why the deposit amount depends on the rental amount.
    – phoog
    Commented May 23, 2017 at 2:34
  • "Landlord-tenant" laws generally pertain to residential property, not garages. So the primary question is, what does your lease agreement say?
    – user6726
    Commented May 23, 2017 at 3:06

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Presumably the security deposit in your lease is expressed as a percentage of the monthly rent - if the monthly rent changes (up or down) then the security deposit in the lease changes. This is perfectly legal and is the norm in commercial leases.

They can still only use the bond for the permitted purposes - there is just more of it. At the end of your lease the increased amount will be returned to you (subject to legitimate deductions.

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In my mind, when I see the question "Is XYZ legal?" it is to be rephrased as "What if any statute forbids XYZ?"

Although the Akerman published in 2020: Security Deposit Laws (Commercial Lease): State Comparison Chart. It does provide a list of California specific subject-matter requirements:

https://www.akerman.com/a/web/65420/Security-Deposit-Laws-Commercial-Lease-State-Comparison-Chart.pdf

"California does not restrict the amount a commercial landlord can require as a security deposit" would seem to be the relevant analysis of CA law.

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