Security Deposit Law in California
A California security deposit, sometimes called a damage deposit, is money a tenant pays their landlord before moving in. Landlords hold these deposits separately from rent and use them to cover costs to repair tenant-caused damage, cleaning, unpaid rent, and other expenses.
Security deposits, detailed in state-specific lease agreements, act as a financial safety net for landlords. Though not required by California law, landlords can use security deposits to protect themselves against financial losses at the hands of their tenants.
In this guide, we’ll break down California’s security deposit laws, maximum amounts landlords can charge, when they can and cannot withdraw from a tenant’s deposit, and the procedures they must follow when returning funds to a tenant.
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California Laws Regulating Security Deposits
California Civil Code §1950.5 outlines how landlords handle security deposits, including deposit limits, return timelines, and deduction procedures.
While security deposit laws are consistent across much of California, cities like Los Angeles and San Francisco enact their own legislation regulating a landlord’s use of a tenant’s damage deposit.
Before implementing security deposit policies within your next lease, review California landlord-tenant laws and reference local ordinances to ensure you’re doing so by the letter of the law.
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Maximum Security Deposit Amount
Maximum amount: As of July 1st, 2024, landlords in California can charge up to one month’s rent for a security deposit. (Whether or not the rental unit is furnished doesn’t matter.) There are a couple of exceptions to consider, however:
- Small landlords can charge tenants up to 2 months’ rent as a security deposit if the tenants are individuals or LLCs composed of individuals. This rule applies to landlords who own no more than two rental properties totaling four units or fewer.
- Service members: The small landlord exception doesn’t apply to tenants who are active-duty service members. California law caps service member security deposits at 1 month’s rent, no matter who owns the property.
Pet deposits: Landlords in California can charge pet deposits as part of the rental unit’s overall security deposit, but the total of the two deposits cannot exceed one month’s rent. Under federal law, landlords cannot charge pet deposits, rent, or extra fees for service animals or emotional support animals (ESAs) (Fair Housing Act).
Penalties: If a California landlord collects a security deposit larger than legally allowed, tenants can pursue action in small claims court to recoup the excess amount. If the judge rules that the landlord acted in bad faith by purposefully overcharging for the deposit, they could award tenants additional damages up to 200% of the original security deposit (California Civil Code §1950.5(l)).
Handling Damage Deposits
Security deposit storage: Landlords in California don’t have to hold a tenant’s security deposit in a separate account, nor must they inform tenants where they deposited the funds.
Interest-bearing account: California law does not require landlords to put security deposits into interest-bearing accounts. However, certain jurisdictions, like Los Angeles and Santa Cruz County, require landlords to pay tenants monthly or annual security deposit interest.
Receipt: California landlords aren’t required to provide tenants with a security deposit receipt.
Documentation: To avoid potential disputes, landlords should always complete move-in and move-out condition reports (accompanied with photos and videos) before and after all tenancies. Doing so details the property’s condition before tenants move in and after they move out and will help landlords determine any tenant-caused damage.
Ownership transfer: Per California Civil Code §1950.5(h), if a landlord sells their rental property, they have two options:
- Transfer the tenant’s security deposit to the new owner and notify the tenant.
- Return the security deposit, less any deductions, to the tenant.
Deductions
When landlords cannot deduct: Landlords in California cannot make security deposit deductions for normal wear and tear, which is “damage or deterioration resulting from ordinary use; normal depreciation.”
A few common examples of normal wear and tear include:
- Faded paint
- Worn carpet
- Minor scratches on the flooring
- Nail holes from hanging pictures
- Loose door handles
When landlords can deduct: California landlords can make security deposit deductions for tenant-caused damage beyond normal wear and tear, cleaning to restore a property to its original condition, unpaid rent, and other fees outlined within the lease agreement.
A few common examples of allowable security deposit deductions include:
- Removal of trash or personal items left behind
- Damage to windows, appliances, walls, etc.
- Inability to collect rent or fees before the tenant moves out
- Cleaning to restore the rental unit to move-in condition
- Unauthorized alterations to the rental unit that require restoration
Return Timeline
Timeframe: California law mandates that landlords must return security deposits to tenants (minus any deductions) within 21 calendar days after the tenant moves out (California Civil Code §1950.5(g)(1)).
Deduction tracking: If a landlord deducts any portion of a tenant’s security deposit, they must provide an itemized list of deductions, with descriptions of each charge, within the 21-day timeframe after move-out. If repairs or cleaning fees exceed $125, landlords must also provide a copy of the receipt or estimate with the itemized list (California Civil Code §1950.5(g)).
Itemized deduction notification: Landlords must mail or personally deliver the remaining security deposit and itemized statement of deductions directly to the tenant. California law does not regulate how the landlord must deliver the deposit funds back to the tenant (California Civil Code §1950.5(g)(1)).
Penalties: If a landlord fails to return a security deposit or provide an itemized list of deductions to the tenant within 21 calendar days, they are not entitled to keep any portion of it and must return the deposit in full to the tenant immediately (California Civil Code §1950.5(g)(1)).
Handling Disputes
Move-in/move-out checklist: To avoid potential security deposit disputes with tenants, landlords should utilize a move-out and move-in checklist each time a tenancy ends and a new one begins. Doing so helps document the property’s condition, supports any justified deductions, and mitigates the risk of disagreements over damage or cleaning charges.
Tenant challenge: If a tenant disputes your security deposit return, respond with a copy of the itemized deductions, move-in/move-out checklist, and any supporting photos, videos, or receipts. Clear documentation is key, and often helps resolve deposit disputes without the need for legal proceedings.
Legal action: If a tenant files a claim in small claims court attempting to recoup part or all of their security deposit, gather all relevant records — including the lease agreement, communication logs, condition reports, receipts, and itemized deductions. The judge will require you to prove all deductions from the deposit were legal and justifiable.
FAQs: Security Deposit Laws in California
What can a landlord legally deduct from a security deposit in California?
California law permits landlords to deduct from a tenant’s security deposit for several reasons, including:
- Unpaid rent or cost to cover the vacancy period if the tenant breaks their lease early
- Cleaning to bring the unit back to move-in condition
- Damage caused during a tenancy beyond normal wear and tear
- Restoration of altered property if unauthorized by the landlord
What is considered normal wear and tear?
Normal wear and tear is the natural, expected decline in a property’s condition due to everyday use. Examples include:
- Faded paint
- Scuffs on walls
- Small holes from hanging picture frames
- Loose door handles
- Worn or frayed carpet
Can California landlords charge pet deposits?
Yes, but the total amount of the pet deposit plus the security deposit must not exceed the California state limit, which, in most cases, is equal to 1 month’s rent. As outlined above, security deposit exceptions apply for small-time landlords and active-duty service members.
The federal Fair Housing Act also prohibits landlords from charging pet rent, deposits, or other pet-related fees for service animals or emotional support animals (ESAs).
Can a landlord charge for painting in California?
Yes, but only if the painting is to repair damage beyond normal wear and tear, including:
- Covering up unauthorized painting to restore it to its original color
- Significant damage to walls (holes, stains, etc.) may require repainting
Landlords cannot deduct painting costs for everyday wear and tear, including minor wall scuffs or faded paint.
Can a landlord ask for more money in addition to a security deposit after a tenant moves out?
California landlords can ask a tenant for additional funds if the costs of unpaid rent and fees, damage, and cleaning equal more than the tenant’s total security deposit. When asking for additional money, landlords should provide tenants with:
- An itemized statement of all deductions
- Receipts (or estimates) for repair that cost over $125
- Written notice to pay the landlord the balance owed
If a tenant disagrees with these charges, they may dispute them directly with the landlord, negotiate a payment plan, or sue the landlord in small claims court.
