California Security Deposit Laws: Limits, Returns, and Deductions

California's security deposit laws were significantly reformed by Assembly Bill 12 (AB 12), which took effect on July 1, 2024. This guide covers every aspect of the updated regulations that landlords must follow.

Security Deposit Limits

Official Law Citation: The rules and regulations outlined on this page are strictly configured under the official California Civil Code §1950.5Anteprima non disponibile. Landlords must always ensure their lease agreements directly adhere to this state code.

Residential Properties Effective

July 1, 2024, the maximum security deposit for all residential properties is one month's rent, regardless of:

• Whether the unit is furnished or unfurnished
• The type of property (apartment, single-family home, condo)
• The number of tenants

This replaced the previous limits of two months' rent for unfurnished units and three months' rent for furnished units.

Exceptions

• Small landlords: Landlords who are natural persons, family trusts, or LLCs where all members are natural persons, and who own no more than two residential rental properties with a combined total of no more than four units, may charge up to two months' rent as a security deposit.
• Active-duty military: The deposit limit is one month's rent regardless of any exceptions

Commercial Properties

Commercial security deposits are governed by Civil Code §1950.7 and have no statutory cap. However, commercial landlords should ensure deposit terms are clearly documented in the lease.

What Can Be Deducted

Landlords may deduct from the security deposit for:

1. Unpaid rent - including any rent owed through the end of the tenancy
2. Cleaning - costs to restore the unit to the same level of cleanliness as move-in (not "like new")
3. Repair of tenant-caused damage - beyond normal wear and tear
4. Restoration of personal property - if agreed upon in the lease

What is NOT Deductible

• Normal wear and tear - faded paint, worn carpet, minor scuffs
• Pre-existing damage - conditions documented before move-in
• Cleaning that was not needed - the unit must be returned to move-in condition, not better
• Costs beyond actual repair** - landlords cannot inflate costs

Return Deadline: 21 Days

Landlords must return the security deposit - or provide an itemized statement of deductions - within 21 calendar days after the tenant moves out.

Itemized Statement Requirements

The statement must include:

1. A description of each deduction and the amount
2. Copies of receipts for charges of $126 or more (adjusted biennially for inflation)
3. If repairs are not yet complete within 21 days, a good faith estimate is allowed, followed by a final accounting within 14 days of completion

Pre-Move-Out Inspection

California law gives tenants the right to request a pre-move-out inspection (Civil Code §1950.5(f)):

• Landlord must notify tenant of the right to request this inspection
• Inspection must occur no earlier than 2 weeks before move-out
• Landlord must provide the tenant with an itemized list of deficiencies
• Tenant must be given the opportunity to remedy identified issues before moving out

Penalties for Non-Compliance

If a landlord fails to comply with security deposit return requirements:

• Bad faith retention: Tenant may sue for up to twice the deposit amount in statutory damages plus actual damages
• Failure to provide itemized statement: Landlord may lose the right to claim any deductions
• Small claims court: Tenants can file claims for up to $10,000 in small claims court

Best Practices for Landlords

1. Document everything at move-in - Take dated photos and videos of the unit's condition
2. Use a move-in/move-out checklist - Have the tenant sign it
3. Keep deposits in a separate account - While not legally required in California, it's best practice
4. Respond to pre-move-out inspection requests - It's the law
5. Return deposits promptly - Don't wait until day 21; earlier returns build good tenant relationships
6. Keep receipts - For any deductions you make

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