California Security Deposit Law

AB 12 rewrote the deposit limit effective July 1, 2024. A landlord may collect a security deposit of no more than one month of rent, and the old distinction between furnished and unfurnished units is gone.

There is a narrow exception. A landlord who is a natural person, or an LLC whose members are all natural persons, and who owns no more than two residential rental properties containing no more than four units total, may collect up to two months of rent. The exception does not apply if the prospective tenant is a service member.

AB 2801 added a documentation requirement that changed how move-outs have to be run. A landlord who deducts for repairs or cleaning must take photographs and give them to the tenant with the itemized statement.

1. Before the tenancy — since July 1, 2025

   For any tenancy beginning on or after July 1, 2025, take photographs of the unit immediately before, or at the start of, the tenancy.

2. After move-out, before the work — since April 1, 2025

   Photograph the unit within a reasonable time after possession comes back and before any repair or cleaning that will be deducted.

3. After the work is done

   Photograph the same areas again within a reasonable time after the repairs or cleaning are complete.

The deposit may be applied to four things and nothing else:

1. Unpaid rent.
2. Cleaning necessary to return the unit to the same level of cleanliness it had at the start of the tenancy.
3. Repair of damage caused by the tenant or their guests — beyond ordinary wear and tear.
4. Restoring or replacing personal property, where the lease allows it and it is not for ordinary wear and tear.

Ordinary wear and tear is never deductible. Faded paint, worn carpet in traffic lanes, and small nail holes are the cost of renting property out. A cigarette burn in the carpet is not.

Within 21 calendar days of the tenant vacating, the landlord must deliver the remaining deposit together with an itemized statement of every deduction. Where any single repair exceeds $125, receipts, invoices, or a good-faith estimate must be attached.

As of January 1, 2026, a landlord who received the deposit or rent by electronic transfer must return the deposit by electronic transfer, unless the parties agree in writing to a different method.

The tenant also has the right to request an initial inspection before moving out, giving them a chance to fix problems themselves before the deduction is calculated. The landlord must give written notice of that right a reasonable time before the tenancy ends.