California security deposit law: the one-month cap, explained

The new rule

Effective July 1, 2024 (under AB 12), California landlords can charge a security deposit equal to no more than one month's rent. This applies to both unfurnished and furnished rentals. Previously the cap was two months for unfurnished and three months for furnished.

The cap is on the total security deposit, not on rent. It does NOT prohibit "last month's rent" being collected separately if structured correctly.

Who's exempt

Small landlords with two or fewer rental properties (and four or fewer total units) can still charge up to two months' rent, provided they:

• Own the property as a natural person (not through an LLC), OR
• Are an LLC where all members are natural persons

Service members renting under SCRA protections are subject to a one-month cap regardless of landlord size.

Refund timing

Landlord must return the deposit (or itemized statement of deductions) within 21 days of the tenant vacating. Late returns expose the landlord to up to 2x the deposit in damages plus the tenant's actual damages.

If deductions exceed $125, the landlord must provide receipts or invoices for any work done.

What you can deduct for

• Unpaid rent.
• Damage beyond normal wear and tear. Carpet stains: yes. Faded paint after 5 years: no.
• Cleaning, only if needed to return unit to move-in cleanliness. Not a routine deduction.
• Items the tenant agreed to in writing.

The pre-move-out walkthrough (offered 2 weeks before move-out) is the tenant's chance to fix issues before you deduct. Most disputes that end up in small claims would have been prevented by an honest walkthrough.