Cal. Civ. Code § 1950.7 governs security deposits for commercial leases and the disposition thereof after the termination of tenancy whether voluntarily or by eviction. Section 1950.7 limits the manner with which a Landlord may apply the security deposit. However, California Courts will uphold a Section 1950.7 waiver should the landlord and tenant agree to the same. Thus, with a waiver, Landlord could effectively apply security deposit to future rent for example, even though 1950.7 would prohibit such an application. See 250 L.L.C. v. Photopoint Corp. (USA), (2005) 131 Cal. App. 4th 703, 718 (“That conclusion is consistent with cases holding that commercial tenants may waive their rights under the Civil Code …and with California’s public policy of ‘enable[ing] and facilitate[ing] freedom of contract by the parties to commercial real property leases.’ Since the Legislature has expressly prohibited waivers of section 1950.5’s protections for residential security deposits…its failure to do so with respect to commercial security deposits indicates that waivers are permissible as to those deposits.”) (Internal citations omitted.) (Emphasis added.)
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