California recently overhauled the rules on how much a landlord can collect up front. The change, made by AB 12, lowered the security deposit cap to one month of rent for most new tenancies and reshaped what landlords can ask for before a tenant moves in.
The Old Rule Versus the New Rule
Before July 1, 2024, landlords could charge up to two months of rent for an unfurnished unit and three months for a furnished one. AB 12, now part of Civil Code section 1950.5, cut that to one month of rent for new tenancies, whether the unit is furnished or not. The cap applies to any money collected beyond the first month of rent, no matter what it is called, including cleaning fees, last month of rent, or pet deposits.
The Small Landlord Exception
AB 12 includes a narrow exception. A landlord who is a natural person, or an LLC whose members are all natural persons, and who owns no more than two residential rental properties with a combined total of four or fewer units, may still charge up to two months of rent. This exception does not apply when the tenant is an active-duty military service member.
How and When the Deposit Must Come Back
Under Civil Code section 1950.5, a landlord must return the deposit, or the balance after lawful deductions, within 21 calendar days after the tenant moves out. The landlord must include an itemized written statement of deductions, and for deductions over 125 dollars, copies of receipts or invoices. If repairs cannot finish within 21 days, the landlord must send a good-faith estimate and then final receipts within 14 days of completing the work.
What a Landlord Can Legally Deduct
Civil Code section 1950.5 limits deductions to unpaid rent, cleaning needed to restore the unit to its move-in condition, repair of damage beyond normal wear and tear caused by the tenant, and replacement of personal property named in the rental agreement. Normal wear and tear, such as minor scuffs, small nail holes, and faded paint, cannot be charged.
When the Landlord Keeps the Deposit Wrongly
If a landlord misses the 21-day deadline for the deposit or the itemized statement, they may lose the right to keep any of it. A court can also award the tenant up to two times the deposit as a bad-faith penalty. These claims can be filed in small claims court without an attorney. Requesting a pre-move-out inspection, which a tenant has the right to do within two weeks before leaving, can prevent many disputes.
Pre-Move-Out Inspections
Under Civil Code section 1950.5, a tenant can request an initial inspection before vacating, conducted within two weeks of the lease ending. At that inspection the landlord must give a written list of any issues that could lead to deductions, letting the tenant fix them before final move-out. Exercising and documenting this right is one of the strongest ways to protect a deposit.
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