California security deposit rules: what AB 12 changed

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 a residential rental is one month’s rent, whether or not the unit is furnished. The law no longer treats furnished units differently.

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 a natural person, or an LLC whose members are all natural persons, and you own no more than two residential rental properties totaling no more than four dwelling units, you may qualify for an exception allowing up to two months. This exception does not apply if the tenant is a service member. 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.

Service members. If you charge a service member more than your standard or advertised security because of credit history, housing history, or a similar factor, you must 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 if the tenant is current on rent (§ 1950.5(c)(4), from April 1, 2025).

Six months of rent in advance. The cap does not bar an advance payment of at least six months’ rent on a lease of six months or longer (§ 1950.5(c)(2)).

Deposits taken before July 1, 2024. The cap 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. The statute does not say what happens if you ask an existing tenant for more security after that date, so treat any new demand as subject to the cap and get advice before topping up an old deposit.

What counts toward the cap

Civil Code § 1950.5(b) defines security as any payment, fee, deposit, or charge imposed at the start of the tenancy, including an advance payment of rent. The only carve-out is the application screening fee under § 1950.6. The cap applies to the total, regardless of what you call each piece.

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.

Run the numbers through the security deposit calculator before you set a number, so the total does not creep over the cap.

All of the following count toward the one-month maximum:

• Security deposit (under any name)
• Last month’s rent collected in advance
• Pet deposits and pet fees
• Key deposits and key fees
• Cleaning deposits and cleaning fees
• Any other payment, fee, or charge collected at move-in, other than first month’s rent and the screening fee

There is no such thing as a non-refundable deposit in California. A lease may not call any security nonrefundable (§ 1950.5(n)). A one-time “non-refundable cleaning fee” or pet fee at move-in is security with the wrong label. It counts toward the cap, and it comes back at move-out minus lawful deductions.

Last month’s rent counts toward the cap

The cap is one month’s rent “in addition to any rent for the first month paid on or before initial occupancy” (§ 1950.5(c)(1)). First month’s rent is the only rent outside the cap. Last month’s rent collected at signing is an advance payment of rent, which § 1950.5(b) treats as security. The California Department of Real Estate’s tenant guide says the same.

Take a $2,000 unit. You can collect the $2,000 first month’s rent, plus no more than $2,000 for the security deposit and last month’s rent combined. If your lease labels part of that as last month’s rent, say so clearly. At move-out it follows the same 21-day rules as the rest of the security.

The 21-day return deadline

Within 21 calendar days of the tenant vacating and returning possession of the unit, you must:

1. Return the full deposit, or the portion you are not deducting, and
2. 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.

Photos are now required

AB 2801 (2024) made photos part of the statute, in two stages:

• Move-out, from April 1, 2025. Photograph the unit within a reasonable time after you get possession back, before any repairs or cleaning you plan to deduct for. Photograph it again after that work is done.
• Move-in, for tenancies starting on or after July 1, 2025. Photograph the unit immediately before, or at the start of, the tenancy.

When you deduct for repairs or cleaning, the photos go to the tenant with the itemized statement.

Deposit tracking in LeaseRooster keeps the move-in baseline, receipts, and itemized statement together so you have them when the 21-day clock is running.

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. If your repair and cleaning deductions add up to more than $125, each one needs support:

• Work you or your employee did: a reasonable description of the work, the time spent, and the hourly rate.
• Work a contractor did: a copy of the bill, invoice, or receipt, with the contractor’s name, address, and phone number if the invoice lacks them.
• Materials and supplies: a copy of the bill, invoice, or receipt.

Plus the photos described above.

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

Send the statement to the address the tenant gave you. If the tenant did not provide one, mail it to the unit they vacated. A missing forwarding address does not extend your deadline, and it will not help you in a small claims dispute.

Since AB 414 (effective January 1, 2026), the refund goes back electronically when the tenant paid the security or rent electronically, unless you agreed in writing on another method (§ 1950.5(h)(1)). With several adult tenants and no written agreement among all of them, a refund check is made out to all the adult tenants on the lease. See California electronic security deposit return (AB 414) for the requirements.

What happens if you miss the deadline

A landlord who retains a security deposit in bad faith can be ordered to pay statutory damages of up to twice the amount of the security, in addition to actual damages (§ 1950.5(m)). The landlord carries the burden of proving the deductions were reasonable.

A landlord who fails to follow the return and itemization rules in bad faith also loses the right to keep any of the security at all (§ 1950.5(h)(7)).

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.

General information, not legal advice

Deposit disputes turn on the details: what the lease says, what the move-in record shows, and local rules that can add to state law. For a contested deduction or a question about a local ordinance, talk to a California landlord attorney.

1. Civil Code § 1950.5(c) One month's rent cap for all units, furnished or unfurnished (small-landlord exception below): AB 12, effective July 2024 View official source ↗
2. Civil Code § 1950.5(h) 21 calendar days to return deposit and provide itemized statement; supporting documents required when repair and cleaning deductions together exceed $125; photos go with any repair or cleaning deduction; electronic return when security or rent was paid electronically (AB 414); forfeiture for bad faith noncompliance View official source ↗
3. Civil Code § 1950.5(b), (n) Security includes any payment, fee, deposit, or charge imposed at the start of the tenancy, including advance rent, except the screening fee; no security may be called nonrefundable View official source ↗
4. Civil Code § 1950.5(c)(2), (c)(4), (c)(6) Six-month advance rent exception; service member higher-security statement (from April 1, 2025); cap does not apply to security collected or demanded before July 1, 2024 View official source ↗
5. Civil Code § 1950.5(g) Move-out photos from April 1, 2025; move-in photos for tenancies beginning on or after July 1, 2025 (AB 2801) View official source ↗
6. Civil Code § 1950.5(m) Bad faith retention: statutory damages of up to twice the amount of the security, plus actual damages View official source ↗