For a new California tenancy, the most you can hold is one month’s rent, on top of the first month’s rent. That is the rule for most landlords since July 1, 2024, and it does not change when the unit is furnished. The old furnished allowance is gone.
AB 12 made the change by rewriting Civil Code § 1950.5(c). The bill was signed on October 11, 2023, and the new cap started applying the following July.
How the cap is worded
The operative sentence is short. A landlord “shall not demand or receive security, however denominated, in an amount or value in excess of an amount equal to one month’s rent, in addition to any rent for the first month paid on or before initial occupancy” (§ 1950.5(c)(1)).
Three phrases in it do most of the work.
- “Demand or receive.” The rule covers asking for more than the cap, not only collecting it.
- “However denominated.” The name on the line item does not matter. More on that below.
- “In addition to any rent for the first month.” First month’s rent is the only rent that sits outside the cap. Last month’s rent does not.
What counts toward the one month
Section 1950.5(b) defines security broadly: any payment, fee, deposit, or charge imposed at the beginning of the tenancy, including an advance payment of rent and any fee to cover the cost of processing a new tenant. The one carve-out is the application screening fee under § 1950.6.
The California Department of Real Estate’s tenant guide puts it plainly. Last month’s rent, a pet deposit, a key fee, and a cleaning fee are all part of the security deposit, no matter what they are called.
Take a $2,600 unit. You can collect $2,600 in first month’s rent and $2,600 in security. If you also want a $400 pet deposit and a $75 key deposit, those come out of the $2,600, not on top of it. The security line drops to $2,125.
The same section also bars a lease from calling any security “nonrefundable” (§ 1950.5(n)). So a one-time “non-refundable cleaning fee” at move-in is not a way around the cap. It is security with the wrong label.
The small-landlord exception: two months
A landlord who meets both of these tests can hold up to two months’ rent (§ 1950.5(c)(5)(A)).
- You are a natural person, or an LLC whose members are all natural persons. A person who is a settlor or beneficiary of a family trust counts as a natural person. The statute defines a family trust as a revocable or irrevocable trust whose settlors and beneficiaries are related as siblings, spouses, domestic partners, children, parents, grandparents, or grandchildren.
- You own no more than two residential rental properties, which together include no more than four dwelling units offered for rent.
Both limits apply at once. A few examples:
| What you own | Properties | Units | Two months allowed? |
|---|---|---|---|
| One house and one duplex, in your own name | 2 | 3 | Yes |
| One fourplex, through an LLC owned by you and your sister | 1 | 4 | Yes |
| Three condos | 3 | 3 | No, three properties |
| A triplex and a duplex | 2 | 5 | No, five units |
| One duplex, through an LLC with a corporate member | 1 | 2 | No, not all natural persons |
Two months is a ceiling, not a default. Plenty of small owners still ask for one month because it fills the unit faster.
The service member carve-out
The two-month exception does not apply when the prospective tenant is a service member, as defined in Military and Veterans Code § 400 (§ 1950.5(c)(5)(B)). You are back to one month. The same paragraph also bars refusing to rent to a service member because of this limit.
A separate rule took effect April 1, 2025 (§ 1950.5(c)(4)). If you charge a service member a higher security than your standard or advertised amount because of credit history, credit score, housing history, or a similar factor, you have to give a written statement of the higher amount and the reason on or before the day the lease is signed. The extra amount comes back after no more than six months of residency if the tenant is not behind on rent, and the return date goes in the lease.
The other exceptions in subdivision (c)
- Six months of rent in advance. The cap does not prohibit an advance payment of at least six months’ rent when the lease term is six months or longer (§ 1950.5(c)(2)).
- Tenant-requested alterations. A landlord and tenant can agree, at the tenant’s request, to a specified fee for structural, decorative, furnishing, or similar alterations, other than cleaning or repair (§ 1950.5(c)(3)).
Deposits taken before July 1, 2024
Subdivision (c) does not apply to security collected or demanded before July 1, 2024 (§ 1950.5(c)(6)). A two-month deposit taken lawfully in 2023 does not have to be partly refunded because the law changed.
The statute does not spell out what happens if you ask an existing tenant for more security after that date. Treat any new demand for security as subject to the cap, and get advice before topping up an old deposit.
Finding your number
The security deposit calculator applies the one-month cap and the small-landlord exception to your rent, including the service member rule. Once the deposit is in hand, Civil Code 1950.5 in plain English covers what you can deduct and the 21-day return deadline. If you are deciding where the money should sit in the meantime, see where to hold a security deposit.
Deposit tracking keeps the amount collected, what it was called, and the date you received it on one record, which is what you will want if a tenant ever questions the total.
This is general information, not legal advice. Rules change and local ordinances vary. Confirm current requirements with your city, county, or an attorney before you act.