This doesn’t sit right. If the lease says the landlord pays water, then the landlord pays water - they can’t suddenly change the rules because a bill came in higher than expected.
Here’s the thing: a toilet flapper leak isn’t tenant damage. It’s a maintenance issue. Under California Civil Code 1941, keeping the plumbing in working order is the landlord’s job. Your son couldn’t reasonably have known about a silent leak that wasn’t causing any visible water on the floor. And with four people plus regular water use in the main house, the landlord has no way to prove the extra usage was all from the ADU anyway.
Security deposit deductions are supposed to cover damage beyond normal wear - not routine maintenance repairs the landlord should have caught themselves.
I’d send a written demand letter asking for that $250 back. Keep a copy. If the landlord refuses, small claims court is a real option here (filing fee runs $30-75). Bring the lease showing who pays water, and any texts or emails about when the flapper was reported and fixed.