California’s security deposit rules changed significantly in 2024. If you have not reviewed your deposit practices since AB 12 took effect on July 1, 2024, there is a reasonable chance you are collecting more than the law allows.
Here is what the current rules require, and where landlords most often get into trouble.
The new deposit cap
Under AB 12, the maximum security deposit for an unfurnished residential rental is one month’s rent. For furnished units, the cap is two months.
Before July 1, 2024, the old rules allowed up to two months for unfurnished units and three months for furnished ones. AB 12 cut those limits roughly in half for most landlords.
Small landlord exception. If you are an individual (not an LLC, corporation, or other business entity) who owns no more than two residential rental properties, you may qualify for an exception allowing up to two months for an unfurnished unit. The exact conditions are in Civil Code § 1950.5(c)1. If this exception might apply to your situation, confirm the details with a California attorney before relying on it.
Existing leases. AB 12 applies to new rental agreements entered on or after July 1, 2024. If you signed a lease before that date and collected a deposit under the old rules, that deposit generally remains valid for the term of that tenancy. When the lease renews or converts to month-to-month, apply the new cap.
What counts toward the cap
The cap applies to the total of all refundable amounts you collect at the start of the tenancy, regardless of what you call them.
This trips up landlords consistently. A pet deposit of $500 and a security deposit of $1,600 on an $1,800/month unit add up to $2,100 — over the one-month limit. Courts look at the substance, not the label on the check.
All of the following count toward the one-month maximum:
- Security deposit (under any name)
- Pet deposits
- Key deposits
- Cleaning deposits
- Any other refundable amount collected at move-in
Non-refundable fees are different. A clearly designated non-refundable pet fee or cleaning fee does not count toward the deposit cap. The key word is “clearly designated” — it must say non-refundable in the lease, and the amount must be reasonable. If a tenant could reasonably expect to get it back, it counts.
Last month’s rent is not part of the deposit
Collecting last month’s rent at signing is permitted under California law and does not count toward the security deposit cap. You can collect it separately, on top of the one-month deposit.
Make sure your lease identifies the last month’s rent and the security deposit separately. They have different rules at move-out, and a vague clause that combines them causes problems when it matters.
The 21-day return deadline
Within 21 calendar days of the tenant vacating and returning possession of the unit, you must:
- Return the full deposit, or the portion you are not deducting, and
- Provide a written itemized statement of every deduction
The clock starts when the tenant actually hands back the keys and vacates, not when the lease term ends on paper. If the lease ran through the 31st but the tenant returned the keys on the 28th, your 21 days started on the 28th.
What you can deduct
California allows deductions for:
- Unpaid rent
- Cleaning costs to restore the unit to the condition it was in at move-in
- Damage beyond normal wear and tear
- Restoring personal property described in the lease that was damaged or taken
You cannot deduct for normal wear and tear. Worn carpet after a three-year tenancy, small scuffs on walls, minor nail holes from hanging pictures — these are ordinary results of someone living in a space. Deducting for them is one of the most common California deposit mistakes, and courts have little patience for it.
The most reliable protection: document the unit’s condition at move-in with date-stamped photos and a signed checklist. Without that baseline, a deduction for damage the tenant says was already there is very hard to defend.
California also gives tenants the right to request a pre-move-out inspection before they vacate. An early walkthrough lets the tenant fix issues before leaving, which limits disputes and constrains what you can later claim. See California pre-move-out inspection requirements for the full process.
Itemization and receipts
Your written statement must describe each deduction specifically. A line that reads “cleaning: $350” with no documentation does not meet the standard. For any single item costing more than $125, you must include copies of receipts, invoices, or contractor estimates.
If the work cannot be completed within 21 days, you may provide a good-faith written estimate with the initial statement. Send the actual receipts within 14 days after the work is done.
Keep your invoices. Vague itemizations are a common and avoidable mistake.
The forwarding address rule
Mail the deposit to the tenant’s forwarding address. If the tenant did not provide one, send it to the rental unit’s address. A missing forwarding address does not extend your deadline, and it will not help you in a small claims dispute.
What happens if you miss the deadline
A landlord who wrongfully withholds a security deposit in bad faith can be ordered to pay up to twice the withheld amount as a penalty, in addition to returning the deposit. California courts have consistently ruled against landlords who miss the 21-day window without a legitimate reason, provide inadequate itemizations, or deduct for normal wear and tear.
The practical approach: complete the walk-through promptly after move-out, document everything, and get the deposit and itemized statement out within three weeks of key return.
- Civil Code § 1950.5(c) One month's rent cap (unfurnished); two months (furnished) — AB 12, effective July 2024 View official source ↗
- Civil Code § 1950.5(g) 21 calendar days to return deposit and provide itemized statement View official source ↗
- Civil Code § 1950.5(g)(2) Receipts required for individual deductions over $125 View official source ↗
- Civil Code § 1950.5(l) Bad faith withholding: court may award up to 2x the withheld deposit as a penalty View official source ↗
Frequently asked questions
What is the security deposit limit in California in 2024?
Under AB 12 (effective July 1, 2024), the maximum is one month's rent for unfurnished residential units and two months for furnished units. Individual landlords who own two or fewer residential properties may qualify for a higher limit on unfurnished units — check Civil Code § 1950.5(c) or consult an attorney.
Can I charge a pet deposit on top of the security deposit in California?
No. A pet deposit counts toward the security deposit cap. All refundable amounts collected at move-in count toward the one-month limit, regardless of what they are called.
How long do I have to return the security deposit in California?
21 calendar days from the date the tenant vacates and returns possession of the unit. The clock starts at key return, not when the lease term ends on paper.
What happens if I miss the 21-day deadline for returning a security deposit in California?
You risk losing your right to deduct anything, and if a court finds bad faith, you can be ordered to pay up to twice the withheld deposit as a penalty, in addition to returning the full amount.
Does last month's rent count as part of the security deposit in California?
No. Last month's rent collected at signing is separate from the security deposit and does not count toward the one-month cap. Keep them clearly separated in the lease, as they have different rules at move-out.
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