General information, not legal advice. Landlord-tenant rules change, and cities and counties can add their own. Check the current statute and local ordinances, and talk to a licensed attorney before you act.
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The short version
- Since July 1, 2024, AB 12 generally caps residential security deposits at one month's rent, with a narrow small landlord exception.
- Landlords can deduct only for unpaid rent, cleaning, damage beyond normal wear and tear and certain items the lease allows.
- The deposit and an itemized statement are due within 21 days after the tenant moves out.
- Tenants can request a pre-move-out inspection, and recent law added photo documentation requirements.
- Withholding a deposit in bad faith can cost a landlord up to twice the deposit amount in penalties, plus damages.
Security deposits are one of the most common sources of disputes between California landlords and tenants, and the rules have tightened in recent years. The core requirements are in California Civil Code section 1950.5, which has been updated by newer laws such as AB 12, which took effect in 2024.
This guide covers the limits, deductions, deadlines and penalties that landlords and property managers need to know. It is general information, not legal advice. Local ordinances can add requirements such as interest payments, so confirm the rules for your city with a California attorney.
For a general overview of how deposits work, see our security deposit guide and the definition of a security deposit.
Deposit limits under AB 12
Starting July 1, 2024, AB 12 generally limits residential security deposits to one month’s rent. Before that date, California allowed two months for unfurnished units and three months for furnished units. The new limit applies to furnished and unfurnished units alike.
There is a narrow small landlord exception. A landlord who is a natural person, or an LLC or family trust whose members are natural persons, and who owns no more than two residential rental properties with no more than four units in total, may collect up to two months’ rent. The exception does not apply if the tenant is a service member, who can be charged no more than one month.
What counts as a deposit
California defines security broadly. Any payment, fee or charge collected at the start of a tenancy that can be used to cover unpaid rent, damage or cleaning is treated as part of the deposit, no matter what it is called. That generally includes:
- Pet deposits
- Cleaning or move-in fees
- Key or security fees
Because these amounts count toward the cap, labeling them nonrefundable does not make them so. An application screening fee is a separate charge with its own rules. The pet deposit definition explains how pet charges usually work.
Allowed deductions
A landlord may deduct only the amounts reasonably necessary for:
- Unpaid rent
- Cleaning the unit to return it to the level of cleanliness it had at move-in
- Repairing damage caused by the tenant or guests, beyond ordinary wear and tear
- Restoring or replacing personal property, such as furniture or keys, if the lease allows it
Landlords cannot charge for ordinary wear and tear, such as minor scuffs, faded paint or carpet wear from normal use. They also cannot use the deposit to fix conditions that existed before the tenant moved in.
Inspections, photos and itemization
When a tenant gives notice or the landlord ends the tenancy, the landlord must notify the tenant in writing of the right to request an initial inspection before move-out. If requested, the inspection takes place no earlier than two weeks before the tenancy ends, and the landlord gives the tenant a written list of proposed deductions so the tenant has a chance to fix the problems.
AB 2801, passed in 2024, added photo documentation requirements that phased in during 2025. In general, landlords must take photos of the unit after the tenant moves out and after repairs are completed, and for newer tenancies, at move-in as well. The photos support each deduction if a dispute arises. Digital inspection tools can make this easier to do consistently.
Within 21 days after the tenant vacates, the landlord must send the remaining deposit and an itemized statement of deductions. For deductions above a set dollar amount, copies of receipts or invoices are required. If repairs cannot be finished within 21 days, the landlord may include a good-faith estimate and then send the receipts once the work is done.
Tip: Complete a written move-in checklist with dated photos for every unit. It is the single best tool for defending deductions later.
Penalties for bad faith
If a landlord keeps a deposit in bad faith, the tenant can sue for the amount wrongly withheld plus a statutory penalty of up to twice the deposit amount. Small claims court is the most common venue for these disputes.
The landlord bears the burden of proving that deductions were reasonable. A missing or late itemization, deductions for normal wear and tear and a lack of documentation all weigh against the landlord.
Transfers and other rules
When a property is sold, the seller must either transfer the deposits to the buyer and notify tenants, or return them to the tenants after deducting any lawful amounts. If the deposit is not handled properly, the buyer can be responsible for it.
California does not require landlords to keep deposits in a separate account or pay interest statewide, but several cities require interest on deposits. Property managers who hold deposits for owners often use a trust account, and TenantLoop accounting can track each deposit by tenant and unit.
Verify current law
California deposit rules were amended in 2024 and 2025, and further changes are possible. Cities and counties can add requirements such as interest, separate accounts or extra notice. Before collecting or withholding a deposit, confirm the current statute text, check local ordinances and consult a California landlord-tenant attorney.
Related reading: California landlord-tenant rights, Texas security deposit laws, the California residential lease agreement and our guide to bookkeeping for landlords.
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The parts people misread.
What is the maximum security deposit in California?
For most residential rentals, the limit is one month's rent, whether or not the unit is furnished. Certain small landlords who are individuals and own only a few units may collect up to two months, but that exception does not apply to tenants who are service members.
Can a California landlord charge a nonrefundable cleaning fee?
No. California treats almost any upfront payment, other than an application screening fee, as part of the security deposit, so it must be refundable and counts toward the cap. A pet deposit also counts toward the limit.
When must a California landlord return a security deposit?
Within 21 days after the tenant vacates. The landlord must return the deposit or send an itemized statement of deductions with any remaining balance, along with receipts when required.
Does California require landlords to pay interest on deposits?
State law does not require interest, but some cities do. Check your local ordinance.