California has very clear statutory prohibitions against commercial landlord’s wrongfully withholding security deposits. Under California Civil Code 1950.7, the commercial landlord must return the security deposit less any “lawful deductions.” Further, if the the landlord still refuses to return the security deposit, then the Landlord may be subject to damages not to exceed two hundred dollars ($200), in addition to any actual damages.
Well, $200 does not seem like much of a deterrent for an aggressive Landlord. However, most commercial leases have attorneys’ fee clauses, and the law provides for the recovery of statutory interest at 10% annually, along with costs to a prevailing party. Taking together, the financial cost to a commercial Landlord who wrongfully withholds a security deposit can quickly escalate.
For example, in one recent case, the commercial landlord wrongfully withheld our client’s security deposit for over two years. After filing suit, we recovered the ENTIRE security deposit plus interest, attorneys’ fees and costs. At the end, the Landlord ended up paying nearly TWICE the tenant’s original deposit!
If your commercial landlord has wrongfully withheld your commercial security deposit in excess of $10,000, call us today to start a conversation.