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A corporate landlord that owns apartment complexes in Southern California was accused of illegally withholding security deposits from tenants and ordered to pay back funds in a settlement.

The case involved Arnel Management Company which owns 19 apartment complexes throughout Los Angeles and Orange counties, according to the California Attorney General’s Office.

The company is accused of automatically deducting preset cleaning charges from renters’ security deposits which violates California law, officials said.

An investigation revealed that the fees were being deducted regardless of the apartment’s condition. Tenants could only avoid the preset cleaning fees by having their units professionally cleaned when they moved out.

Under the settlement agreement announced Friday, Arnel will pay over $1 million for refunds to tenants as well as:

  • $500,000 in additional civil penalties
  • $650,000 that will go to tenant rights-related legal aid organizations in Orange and L.A. counties
  • Be prohibited from requiring a tenant to repair any damages or defective conditions that preexisted the tenancy or that resulted from ordinary wear and tear
  • Be prohibited from imposing any pre-set or predetermined deductions, or treating any portion of a security deposit as nonrefundable, including, without limitation, by charging a standard cleaning fee, a standard carpet cleaning fee, a standard painting fee, or any other standard fees or deductions not tied to the condition of the unit
  • Be required to provide clear notice to tenants of their rights
  • Be required to respond to tenant complaints in writing, and support security deposit deductions with pictures

Arnel had previously reached a settlement in 2001 involving similar allegations related to its security deposit withholding practices.

According to the A.G.’s office, under state law, withholding cleaning fees from a security deposit is allowed only when the unit is not left in the same level of cleanliness as when the tenant moved in. If tenants clean the unit themselves, landlords cannot deduct fees for repairing ordinary wear and tear. 

Tenants can also ask their landlord to inspect their unit before moving out to identify any issues, giving the tenant a chance to fix the problem and avoid any security deposit loss. 

More information on California renters and their rights can be found here. A consumer alert on security deposits can be found here. It is also available in Spanish, Chinese, Korean, Tagalog, and Vietnamese.