California Lease Renewal Agreement: Rent Caps, Deposits, and Notice

A California lease renewal agreement is governed by the Tenant Protection Act and related state law, which cap most rent increases at 5% plus the local Consumer Price Index (with a 10% ceiling), require just cause to refuse renewal for tenants of at least 12 months in covered properties, and set specific rules for disclosures, notice, and security deposits. Even if no new document gets signed, California doesn’t treat the tenancy as over. Civil Code 1945 automatically converts an expired fixed-term lease into a month-to-month tenancy on the same terms once the tenant stays and the landlord keeps accepting rent.1California Legislative Information. California Code Civil Code 1945

That automatic rollover protects the tenant’s right to stay, but it also gives the landlord more room to change terms on relatively short notice. A signed renewal for a new fixed term locks in rent and conditions for the full period, which is why many tenants push for one instead of drifting into month-to-month status.

When a Landlord Can Refuse to Renew

For most California tenants who have lived in a rental for 12 continuous months, a landlord cannot simply let the lease expire and walk away from the renewal. Civil Code 1946.2, enacted through the Tenant Protection Act (AB 1482), requires a recognized legal reason.2California Legislative Information. California Code Civil Code 1946.2

At-fault reasons include:

  • Nonpayment of rent
  • Breach of a material lease term after written notice and a chance to fix it
  • Criminal activity on the property or directed at the owner
  • Nuisance or waste
  • Unauthorized subletting
  • Refusing to sign a renewal when the landlord offers similar terms for a similar duration, and those terms comply with the law

That last one catches tenants off guard. If the landlord presents a renewal with terms substantially similar to the expiring lease and the tenant just refuses to sign, the refusal itself becomes grounds for termination.2California Legislative Information. California Code Civil Code 1946.2 The qualifier matters: the terms have to be “similar.” A landlord can’t drop in drastically different conditions and then claim the tenant refused.

No-fault reasons are situations outside the tenant’s control, such as the owner or a close family member moving in, a major remodel that requires the unit to be vacated, or withdrawal from the rental market. When a landlord terminates for a no-fault reason, they must pay relocation assistance equal to one month’s rent or waive the tenant’s final month of rent.3State of California – Department of Justice – Office of the Attorney General. Landlord-Tenant Issues Skip that payment and the termination notice is void.

Which Properties Are Exempt

Not every rental is covered by the just cause and rent cap rules. Civil Code 1946.2 and 1947.12 carve out several categories:4California Legislative Information. California Code Civil Code 1947.12

  • Units that received a certificate of occupancy within the previous 15 years. The window rolls forward, so a building completed in 2012 loses its exemption in 2027.
  • Single-family homes and condos, but only if the owner is not a corporation, real estate investment trust, or LLC with a corporate member, and the owner has given the tenant a specific written notice of the exemption.
  • Owner-occupied duplexes where the owner lives in one of two units in the same structure.
  • Deed-restricted affordable housing already subject to government affordability requirements.
  • Dormitories owned and operated by schools or colleges.

For the single-family and condo exemption, the written notice is not optional. It has to contain prescribed language stating the property is not subject to the rent cap or just cause requirements and identifying the specific exemption.4California Legislative Information. California Code Civil Code 1947.12 If the landlord never delivered that notice, the exemption doesn’t apply, and the tenant gets the full protections regardless of property type.

How Much Rent Can Go Up at Renewal

For covered properties, Civil Code 1947.12 caps rent increases at 5% plus the local change in the Consumer Price Index, or 10% total, whichever number is lower. The calculation uses the lowest gross rent charged for the unit at any point in the prior 12 months as the starting figure.4California Legislative Information. California Code Civil Code 1947.12 The California Attorney General’s office confirms the formula applies over any 12-month period, not just at renewal time.3State of California – Department of Justice – Office of the Attorney General. Landlord-Tenant Issues

A detail that trips people up: temporary discounts, concessions, or move-in specials during the prior term are excluded when calculating the lowest gross rent. If a tenant paid $2,000 per month but had a $200 promotional discount for three months, the base for the cap calculation is $2,000, not $1,800. The lease or renewal agreement must list gross rent and any discounts as separate line items.4California Legislative Information. California Code Civil Code 1947.12

Local Rent Control Can Set a Lower Ceiling

Cities with their own rent stabilization ordinances often impose caps well below the state formula. Santa Monica, for example, limits annual increases for rent-controlled units to roughly the rate of inflation, which in some years produces a number far lower than 5% plus CPI.5City of Santa Monica. How Rent Control and State Law AB 1482 Impacts You Berkeley, San Francisco, Los Angeles, Oakland, and several other cities run similar programs. Where a local ordinance sets a lower cap, the local figure controls. The state cap is a ceiling, not a floor.

A rent increase that exceeds the allowable cap is not enforceable, and it can expose the landlord to a legal challenge and an obligation to refund the excess. Getting the math right at renewal time avoids the issue entirely.

Disclosures to Include or Update

California requires landlords to provide or update several disclosures whenever a new lease or renewal is signed. Skipping any of them creates enforceability problems down the road. The California Department of Real Estate publishes a full list; the ones most likely to come up at renewal are:6California Department of Real Estate. Landlord’s Disclosures

  • Lead-based paint, for pre-1978 buildings. Federal law requires the landlord to disclose known lead hazards and provide the EPA pamphlet “Protect Your Family From Lead in Your Home” before signing. A signed copy of the disclosure must be kept for at least three years.7U.S. Environmental Protection Agency. Real Estate Disclosures about Potential Lead Hazards
  • Bed bug information. Civil Code 1954.603 requires written notice about identification, prevention, and reporting in every new lease. A landlord also cannot rent a unit they know has an active infestation.
  • Flood hazard zones. If the landlord knows the property sits in a special flood hazard area or area of potential flooding, Government Code 8589.45 requires written disclosure in every lease or renewal.8California Legislative Information. California Code GOV 8589.45
  • Asbestos, for pre-1981 buildings. Known or reasonably suspected asbestos must be disclosed.
  • Pest control treatments. If the property is under an ongoing pest control service contract, tenants must receive a copy of the notice describing what pesticides will be used.
  • Meth contamination. If a health officer has issued an order regarding methamphetamine contamination, it must be disclosed in writing before the tenant signs.

Any disclosure that was accurate at the original lease but has since changed, such as a newly identified flood zone, a completed lead abatement, or a new pest control contract, should be updated in the renewal. The renewal acts as an amendment to the original lease, and all original terms stay in effect unless specifically overridden. Changes to house rules, parking, or pet policies should be written into the renewal clearly enough that neither side has to guess what changed.

Notice Requirements for Rent Changes

How much notice a landlord must give depends on whether the tenancy is month-to-month and how large the rent increase is. Civil Code 827 sets the rules for changes to periodic tenancies:9California Legislative Information. California Code Civil Code 827

  • Rent increase of 10% or less measured against the prior 12 months: at least 30 days’ written notice before the increase takes effect.
  • Rent increase greater than 10%: at least 90 days’ written notice.

These periods apply to month-to-month tenancies, which is the situation most tenants find themselves in when a fixed-term lease expires and rolls over under Civil Code 1945. For a fixed-term renewal where both sides are negotiating a fresh lease period, there is no specific statutory notice deadline, but the rent cap still applies to covered properties, and landlords typically start the conversation 60 to 90 days before the current term ends.

Acceptable delivery includes handing the notice directly to the tenant or mailing it. If served by mail, additional time must be added to account for delivery under the Code of Civil Procedure. Keeping proof of delivery, such as a signed receipt or certified mail tracking, protects the landlord if the tenant later disputes whether the notice arrived on time.

Security Deposit Limits After AB 12

California’s security deposit law changed with AB 12, which took effect on July 1, 2024. The maximum security deposit is now capped at one month’s rent, whether the unit is furnished or unfurnished.10LegiScan. Bill Text CA AB12 A narrow exception allows small landlords, meaning individuals (not corporations or LLCs with corporate members) who own no more than two rental properties totaling four or fewer units, to collect up to two months’ rent.

At renewal, this cuts two ways. If the landlord collected a larger deposit under the old rules (which allowed up to two months for unfurnished units and three months for furnished), they are not required to refund the excess on an existing tenancy, but they cannot demand more deposit money that would push the total above the new cap. If rent goes up at renewal, the landlord can request an additional deposit payment only up to the new one-month limit based on the updated rent. A tenant whose rent rises from $2,000 to $2,100 could owe an additional $100 if their current deposit is below the new rent amount.

Signing the Agreement

Electronic signatures are valid for California lease renewals. The California Uniform Electronic Transactions Act (Civil Code 1633.1–1633.17) gives e-signatures the same legal standing as handwritten ones.11California Department of General Services. Electronic Signatures, Electronic Transactions and Electronic Record Management Policy Platforms like DocuSign and HelloSign are widely used. Both parties must sign and date, and the landlord must provide the tenant with a fully executed copy.

Keep the signed renewal alongside the original lease. Together they form the complete record of the tenancy, and if terms were modified at renewal, the pair makes it easy to trace what changed and when. Tenants can also request a copy of their lease once per calendar year.

If You’re an Active-Duty Service Member

Active-duty military personnel who sign a lease renewal in California have the right to terminate it early without penalty under the federal Servicemembers Civil Relief Act if they receive permanent change of station orders or deployment orders lasting more than 90 days.12Military OneSource. Military Clause: Terminate Your Lease Due to Deployment or PCS To use that right, the service member delivers written notice along with a copy of their orders, either by hand, return-receipt mail, or a private carrier like FedEx or UPS. Once notice is properly delivered, the lease terminates 30 days after the next monthly rent payment is due.

Watch for any clause in a renewal that asks you to waive SCRA protections. Signing that away could eliminate the right to break the lease penalty-free for military orders. If the renewal doesn’t already include a military clause, ask for one.

Fair Housing and Credit Checks at Renewal

Federal and California fair housing laws apply at renewal just as they do at initial leasing. A landlord cannot refuse to renew or impose different terms based on race, religion, national origin, sex, familial status, disability, or any other protected class. For tenants with disabilities, the Fair Housing Act requires landlords to make reasonable accommodations to lease terms when necessary, which could include adjusting a renewal’s duration or modifying certain provisions when the tenant can demonstrate a disability-related need.

If a landlord runs a new credit check as part of renewal and changes terms based on the report, whether that means a higher deposit, a rent increase beyond what they would otherwise charge, or a decision not to renew, the federal Fair Credit Reporting Act requires an adverse action notice. That notice must identify the consumer reporting agency that supplied the report and inform the tenant of their right to obtain a free copy and dispute inaccuracies within 60 days.