Key Takeaways
- Security deposit limits have changed. As of July 1, 2024, most California landlords may collect no more than one month’s rent as a security deposit, regardless of whether the unit is furnished, with limited exceptions for small property owners.
- Deposits must be handled and deducted properly. Landlords may only deduct for approved reasons such as unpaid rent, damage beyond normal wear and tear, cleaning, or unauthorized alterations, and must keep deposits available for return after move out.
- Strict return deadlines and penalties apply. Any remaining security deposit must be returned within 21 days of move out along with an itemized statement if deductions are made, or landlords risk significant financial penalties for late or improper returns.
As a landlord in California, long term success begins with a clear understanding of your legal responsibilities, including the state’s security deposit rules.
Knowing how to properly collect, hold, and return security deposits can help you avoid costly mistakes, missed deadlines, and disputes with residents.
In this guide by Keyrenter Contra Costa, you will learn the essentials of California security deposit law so you can manage deposits confidently, stay compliant, and protect your investment.
Keep reading to learn more!
Maximum Security Deposit Law
Before July 1, 2024, the maximum security deposit a landlord could charge in California depended on whether the rental unit was furnished or unfurnished. For unfurnished units, the limit was two months’ rent. For furnished units, landlords could charge up to three months’ rent.
This changed with the passage of Assembly Bill 12, which took effect on July 1, 2024. Under the new law, landlords may collect a maximum security deposit equal to one month’s rent, regardless of whether the unit is furnished or unfurnished.
There is a limited exception to this rule. Landlords who own no more than two rental properties with a combined total of four units may collect up to two months’ rent as a security deposit.
Additional Pet Deposits
California landlords are generally allowed to charge an additional deposit for residents who have pets. However, residents with assistance animals must be exempt from pet deposits.
Assistance animals include service animals and emotional support animals and are protected under federal fair housing laws.
Landlords must also make reasonable accommodations for residents with disabilities, even if the investment property has policies that would otherwise restrict pets or access.
Examples of reasonable accommodations may include:
- Assigning an accessible parking space even when parking is first come, first served.
- Adjusting rent payment dates to align with disability income payments.
- Allowing a resident with a mobility impairment to move to a ground floor unit.
- Providing notices in accessible formats such as electronic copies, large print, or braille.
Security Deposit Storage
California law does not require landlords to store security deposits in a specific type of account or to provide notices about where the deposit is held. Landlords are not required to use interest bearing accounts.
The primary requirement is that the funds remain available and intact so they can be returned to the resident after move out, minus any lawful deductions.
Security Deposit Deductions
Landlords in California may make deductions from a security deposit for specific, allowable reasons, including:
- Covering damage that goes beyond normal wear and tear.
- Unpaid rent owed under the lease agreement.
- Cleaning costs needed to return the unit to the same level of cleanliness as at move-in.
- Replacing items listed in the lease that the resident removed.
- Restoring the unit after unauthorized alterations.
However, landlords may not deduct for pre-existing conditions that existed before the resident moved in, damage caused by the landlord’s failure to properly maintain or repair the property, normal wear and tear such as faded paint or loose doorknobs, or costs related to upgrading or improving the unit.
Security Deposit Returns
California law sets a strict deadline for returning a resident’s security deposit. Any remaining portion must be returned within 21 days after the resident moves out. If deductions are made, the landlord must also provide an itemized statement detailing those deductions within the same time frame.
Failure to return the deposit on time can result in significant penalties. A landlord who misses the deadline may be required to return the full amount wrongfully withheld. If a court determines the deposit was withheld in bad faith, the landlord may be liable for up to twice the amount of the security deposit.
Conclusion
Security deposits are a highly regulated part of renting property in California, and landlords must follow the rules carefully to avoid disputes and legal penalties.
Understanding how much you can charge, how deposits may be used, and when they must be returned is essential for protecting your investment and maintaining positive resident relationships.
Keyrenter Property Management Contra Costa helps property owners navigate these requirements with confidence.
From rental marketing and resident screening to rent analysis and full service property management, our team provides the expertise needed for stress free ownership and maximized returns. Contact us today to learn how we can support your rental property goals.
Disclaimer: This blog should not be used as a substitute for legal advice from a licensed attorney in your state. Laws frequently change, and this post might not be updated at the time of your reading. Please contact us for any questions you have in regards to this content or any other aspect of your property management needs.
