California Security Deposit Laws: Limits, Deductions, and Deadlines

California security deposit law, codified at Civil Code § 1950.5, strictly regulates how much a landlord can collect, what deductions are permitted, and when and how the deposit must be returned. Recent legislation — including AB 12 (deposit caps), AB 2801 (photo documentation), and AB 414 (electronic refunds) — has expanded landlord obligations. Mishandling a security deposit can result in statutory penalties of up to twice the deposit amount.

Maximum Deposit Amounts

Effective July 1, 2024, AB 12 caps security deposits at one month's rent for most residential tenancies, regardless of whether the unit is furnished or unfurnished. (Previously, the limit was two months' rent for unfurnished units and three months' rent for furnished units.)

A limited exception exists for small landlords: a natural person (or LLC with all natural-person members) who owns no more than two residential rental properties containing a total of four or fewer units may charge up to two months' rent. This exception does not apply if the prospective tenant is a service member. The new cap applies to tenancies beginning on or after July 1, 2024.

What Can Be Deducted

• Unpaid rent
• Cleaning necessary to restore the unit to its move-in condition (beyond normal wear and tear)
• Repair of damages caused by the tenant (beyond normal wear and tear)
• Restoration of personal property if the lease allows it

Determining Normal Wear and Tear

The distinction between normal wear and tear and tenant-caused damage is one of the most frequently litigated issues in security deposit disputes. California courts have generally held that faded paint, minor scuffs on walls, worn carpet in traffic areas, and minor nail holes constitute normal wear and tear. By contrast, large holes in walls, stained or burned carpet, broken fixtures, unauthorized paint colors, and pet damage are typically chargeable to the tenant.

The 21-Day Rule

Within 21 calendar days after the tenant vacates, the landlord must return the deposit or provide an itemized written statement listing every deduction, along with copies of receipts or invoices for deductions exceeding $125. If repairs cannot be completed within 21 days, the landlord must provide a good-faith estimate and follow up with actual costs within 14 days of completion. (Civil Code § 1950.5(g).)

Photo Documentation Requirements (AB 2801)

AB 2801 amended Civil Code § 1950.5 to require photographic documentation:

• Effective April 1, 2025: Landlords must photograph the unit after the tenant vacates but before any repairs or cleaning for which deductions will be made, and again after repairs are completed. Photos must be provided to the tenant with the itemized statement.
• Effective July 1, 2025: For tenancies beginning on or after this date, landlords must also photograph the unit immediately before or at the inception of the tenancy.

Photos may be delivered by mail, email, flash drive, or online link.

Electronic Refund Requirements (AB 414)

Effective January 1, 2026, if the tenant paid rent or the security deposit electronically, the landlord must return the deposit electronically to a bank account designated by the tenant in writing — unless both parties agree otherwise in writing. Landlords must notify tenants of their right to receive refunds electronically.

Pre-Move-Out Inspection

Landlords must offer the tenant an initial inspection no earlier than two weeks before the termination date. The inspection must be offered; it is only conducted if the tenant requests it. After the inspection, the landlord provides an itemized list of proposed deductions, giving the tenant the remaining time before move-out to address the issues.

Penalties for Violations

If a landlord retains the deposit in bad faith, the tenant may recover up to twice the deposit amount in statutory damages, in addition to actual damages. The burden of proof is on the landlord to show the reasonableness of deductions. (Civil Code § 1950.5(l).)