California Security Deposit Laws for Landlords

California limits a residential security deposit to one month's rent, on top of the first month's rent, for deposits collected on or after July 1, 2024. A landlord who is an individual (or an LLC owned only by individuals) and owns no more than two rental properties with no more than four units in total may collect up to two months' rent. Within 21 calendar days after the tenant moves out, you must return the deposit, minus allowed deductions, with an itemized statement. For repair and cleaning deductions over $125, the statement must include receipts and photos.

These rules come from Cal. Civ. Code section 1950.5, and some cities add their own requirements.

How much can you charge?

The cap covers any payment, fee, deposit, or charge collected as "security, however denominated." That includes pet deposits, key deposits, cleaning fees, and any advance rent beyond the first month. Furnished and unfurnished units have the same cap. The one-month limit came from AB 12 and does not apply to deposits you collected before July 1, 2024.

Worked example: rent is $3,000. A corporate owner can collect $3,000 first month's rent plus a $3,000 deposit, $6,000 at move-in. A qualifying small landlord can collect $3,000 rent plus up to $6,000 in deposit, $9,000 total.

Two arrangements sit outside the cap:

• Six months' prepaid rent. On a lease of six months or longer, you may accept at least six months' rent in advance.
• Tenant-requested alterations. You and the tenant may agree on a fee for structural, decorative, or furnishing changes the tenant asks for. Cleaning and repairs do not qualify.

Service members get one more rule. Since April 1, 2025, if you charge a service member more than your standard deposit because of credit or housing history (still within the one-month cap), you must explain the higher amount in writing by lease signing. You must return the extra after no more than six months if the tenant is not behind on rent, and the lease must state that return date.

Your lease cannot call any part of the deposit "nonrefundable." List the deposit amount and its allowed uses in the lease; see California lease required disclosures for the rest of what the lease must say.

What can you deduct?

Section 1950.5 allows four uses of the deposit:

1. Unpaid rent.
2. Repair of damage beyond ordinary wear and tear caused by the tenant, a guest, or a licensee.
3. Cleaning needed to return the unit to the level of cleanliness it had at move-in.
4. Restoring or replacing personal property, such as furniture, if the lease allows the deposit to be used for it.

You cannot charge for ordinary wear and tear or for defects that existed before the tenancy. You also cannot charge for professional carpet cleaning or other professional cleaning unless it is reasonably necessary to return the unit to its move-in condition. If a tenant sues, you carry the burden of proving that the amounts you kept were reasonable. For how landlords typically apply the deposit, see what security deposits are usually used for.

What photos must you take?

AB 2801 added a photo requirement in two stages:

• Move-in (tenancies starting on or after July 1, 2025): photograph the unit immediately before or at the start of the tenancy.
• Move-out (since April 1, 2025): photograph the unit within a reasonable time after the tenant returns possession, before any repair or cleaning you will deduct for, and again within a reasonable time after that work is done.

When you deduct for repairs or cleaning, you send these photos with the itemized statement. Date-stamped photos of each room, taken from the same angles at move-in and move-out, let you show which damage is new. A signed move-in checklist adds a second record; see whether a move-in inspection is required.

What is the pre-move-out inspection?

Within a reasonable time after you or the tenant gives notice to end the tenancy, or before a fixed-term lease ends, you must tell the tenant in writing that they can request an initial inspection and be present for it. The same notice must include the statute's statement that former tenants may reclaim abandoned personal property, subject to conditions, and may have to pay storage costs to get it back. If the tenant asks for one:

1. Schedule it no earlier than two weeks before the tenancy ends, with at least 48 hours' written notice of the date and time. You and the tenant can skip the 48 hours only by both signing a written waiver.
2. Do the inspection whether or not the tenant attends, unless the tenant withdraws the request.
3. Give the tenant, or leave inside the unit, an itemized statement of the repairs and cleaning you would deduct for. It must include the text of the four allowed uses listed above.
4. Let the tenant fix the listed items before moving out to avoid those deductions.

Once you have done this inspection, you generally cannot deduct for items you could have seen and did not list. Exceptions cover damage that happens after the inspection and items hidden by the tenant's belongings. The inspection duty does not apply when the tenancy ends after a three-day notice for unpaid rent, a lease breach, or nuisance; see the California eviction process. Other entry during the tenancy follows the notice rules in California landlord entry and privacy rules.

How do you return the deposit and itemized statement?

You have 21 calendar days after the tenant vacates. By that day, send the remaining deposit and an itemized statement showing each deduction and its reason.

Documentation. If repair and cleaning deductions together exceed $125, include with the statement:

• For work by you or your employees, a description of the work, the time spent, and a reasonable hourly rate.
• For a contractor, a copy of the bill, invoice, or receipt, with the contractor's contact information.
• For materials, a copy of the bill, invoice, or receipt.
• The move-out photos described above.

If deductions are $125 or less, or the tenant signed a written waiver at or after notice to end the tenancy (or within 60 days before a fixed-term lease ends) that substantially repeats the statute's text on these documents, you can skip these documents. If the tenant asks for them within 14 days after receiving the statement, you must send them within 14 days of the request.

Repairs not finished in 21 days. If a repair by you or your employee cannot reasonably be finished within 21 days, or a contractor's or supplier's invoice has not arrived, you may deduct a good-faith estimate and send it with the statement on time. A missing invoice means listing that vendor's name, address, and phone number. Within 14 days after the work is done or the invoice arrives, send the final statement and documents, plus any part of the estimate you did not use.

Payment method. Since January 1, 2026 (AB 414), if the tenant paid the deposit or rent electronically, you must return the deposit electronically to an account the tenant names in writing, unless you both agree in writing to another method. In that case, within a reasonable time after either side gives notice to end the tenancy, or before the lease ends, tell the tenant in writing that they have the right to an electronic refund. Otherwise, return it in person or by check sent first-class mail to the address the tenant gives you, or to the vacated unit if they give none. When several adult tenants share the unit, the default is one check payable to all of them unless they all sign an agreement otherwise. You may email the statement only if you and the tenant agree to it.

If you sell the building, transfer the deposit to the buyer or return it to the tenant, minus allowed deductions, and notify the tenant in writing.

What happens if you get it wrong?

• Bad-faith penalty. A court can award the tenant up to twice the deposit as statutory damages, plus actual damages, when you keep any part of it in bad faith. The court can award this even if the tenant does not ask for it.
• Losing the right to deduct. If you fail in bad faith to meet the 21-day return and documentation rules, you lose the right to keep any part of the deposit.
• Small claims court. Tenants usually sue in small claims court, where an individual can claim up to $12,500 under Code of Civil Procedure section 116.221. See whether to represent yourself in small claims court.

On a $3,000 deposit, a bad-faith finding can cost you the $3,000 you kept plus up to $6,000 more, $9,000 total.

Do cities add their own deposit rules?

Yes. State law does not require interest on deposits, but some cities do. San Francisco requires interest on any deposit held more than one year, under Administrative Code Chapter 49, except where the rent is government-subsidized. The Rent Board rate is 4.2% simple interest for March 1, 2026 through February 28, 2027. You pay it each year on the anniversary of when you received the deposit, and you pay any prorated interest within two weeks after the tenant moves out, which is sooner than the 21-day deposit deadline. Check your city's rent board or housing department before you set a deposit or close one out.