Update 08/12/25
Navigating the complex landscape of California’s rental market can be daunting for landlords, especially when it comes to understanding and complying with security deposit laws. As a landlord, it’s crucial to be well-versed in these regulations to avoid legal pitfalls and ensure a smooth relationship with your tenants. This comprehensive guide will walk you through everything you need to know about California security deposit laws, from the maximum amounts you can charge to the specific conditions under which you can withhold these deposits. Equip yourself with the knowledge to manage your properties effectively and maintain a fair and legal approach to handling security deposits.
What is a Security Deposit?
It is a sum, typically in cash, paid by the tenant before moving in, based on monthly rent. For example, if rent is $1,000 and the agreement requires a deposit equal to one month’s rent, the tenant pays $2,000 upfront. That deposit must be returned at move-out, minus lawful deductions for damage, unpaid rent, or lease violations.
Benefits of Collecting a Security Deposit
- Encourages tenants to follow lease terms.
- Protects the property from damage.
- Helps landlords address minor repairs without litigation.
- Offers a safeguard if rent is unmet.
How Much Can Landlords Charge as a Security Deposit in California?
As of July 1, 2024, AB 12 limits security deposits to one month’s rent (furnished or not). A small-landlord exception allows up to two months if the landlord is a natural person (or all-natural-person LLC) owning no more than two properties with up to four units—but not for active-duty service member tenants.
Points to Remember
- Include deposit details—amount, deductions, holding institution, and return timeline—in the lease.
- Provide a receipt with deposit and interest details.
When Can Landlords Make Deductions?
Permissible deductions: unpaid rent, tenant-caused damage beyond ordinary wear and tear, cleaning, and (if allowed by contract) replacing personal property. Deposits can’t cover preexisting damage or normal wear. Offer a pre-move-out inspection and give 21 days for return of deposit with an itemized statement (longer if repairs unfinished).
How to Handle Security Deposit Disputes
Explain deductions, document them thoroughly (photos, receipts), and if unresolved, consider small claims court where tenants may recover double the deposit for bad faith retention.
Recent Legal Updates (2025)
- AB 2801 (Effective 2025): Requires move-in and move-out photographs related to deposit deductions.
- SB 611 (Effective 2025): Additional deposit charges for service members require documentation and must be refunded within six months.
- Fee Prohibitions: No fees for notice delivery or paying deposits/rent by check.
By weaving these updates into your policies and lease language, you’ll stay compliant and minimize disputes—protecting both your properties and your business.
