Legal Question in Real Estate Law in California

It is a rule established by a California Supreme Court case called Granberry v. Islay Investments (1995) 9 Cal.4th 738. " If, within the specified period, the landlord has not provided the tenant with a written accounting of the portion of the security deposit he plans to retain, the right to retain all or part of the security deposit under section 1950.5, subdivision (f), has not been perfected, and he must return the entire deposit to the tenant. " (Id., at p. 745.)

As Mr. Roach says, the deposit must indeed be returned in full. However, the tenant is not necessarily "off the hook" to the landlord:

In the Granberry ruling, the court held that a landlord who has in good faith failed to return a security deposit as required by Civil Code section 1950.5 can nonetheless recover damages for unpaid rent, repairs, and cleaning in a subsequent judicial proceeding. (Granberry v. Islay Investments, 9 Cal.4th at pp. 749-750, 38 Cal.Rptr.2d 650, 889 P.2d 970.) The court reasoned that "the mere fact that the landlord has lost the right to take advantage of the summary deduct-and-retain procedure of section 1950.5, subdivision (f), does not lead to the conclusion that he has lost all right to claim damages for unpaid rent, repair, and cleaning, whether through setoff or otherwise." (Granberry, at p. 745).