California Security Deposit Laws: AB 12, Deductions, and the 21-Day Rule

California security deposit law caps most residential deposits at one month’s rent, whether the unit is furnished or not, and requires the landlord to return the money or account for every dollar within 21 days after you move out. The cap took effect July 1, 2024 under Assembly Bill 12, which amended California Civil Code Section 1950.5.¹ Before the change, landlords could charge up to two months’ rent unfurnished and three months furnished.²

The cap sits on top of your first month’s rent. If rent is $2,500, the landlord can collect $2,500 for the deposit plus $2,500 for the first month at move-in. What they cannot do is add another charge labeled as a deposit under a different name. The statute reaches “any payment, fee, deposit, or charge” that secures the tenancy, so a separate “last month’s rent” payment counts toward the same one-month ceiling.³⁴ California also prohibits labeling any portion of a deposit “nonrefundable.” A lease clause saying otherwise is unenforceable.

When a Landlord Can Still Charge Two Months

One exemption survives. A small landlord can collect up to two months’ rent if two things are both true: the owner is a natural person, a family trust, or an LLC whose members are all natural persons, and the owner has no more than two rental properties totaling no more than four units available for rent.¹⁵ A single corporate member in the LLC breaks the exemption and drops the landlord back to the one-month cap.

The exemption also does not apply when the tenant is a military service member. A qualifying small landlord renting to someone on active duty is limited to one month’s rent.⁵

What a Landlord Can Deduct

Section 1950.5 lists four permitted uses for your deposit:³

Unpaid rent you owe when you leave.
Cleaning to return the unit to the level of cleanliness it had when you moved in.
Repairs for damage beyond normal wear and tear caused by you or your guests.
Replacing or restoring personal property or fixtures covered by the lease, other than through ordinary wear.

Deductions must be “reasonably necessary.” A landlord cannot charge for pre-existing damage, inflate repair costs, or bill you for upgrades that go beyond restoring the original condition.¹

Normal Wear and Tear or Tenant Damage

Most deposit fights come down to this line. Wear and tear is the gradual deterioration of simply living somewhere. Damage is something avoidable, usually from negligence or misuse. Some familiar examples:

A few small nail holes from hanging pictures are wear. Dozens of large holes or anchor damage are not.
Faded paint is wear. Unauthorized paint colors, crayon, and water stains are damage.
Worn carpet in high-traffic areas is wear. Stains, burns, rips, and pet damage are deductible.
Minor scuffs on wood floors are wear. Deep gouges from pet claws or dragged furniture are not.
General countertop wear is normal. Cuts and burns are damage.
A running toilet or a stuck window is wear. A broken tank or shattered pane is damage.

Photograph every room the day you move in and the day you move out. The landlord carries the burden of proving that any deduction was reasonable, so your photos matter most when the landlord’s paperwork is thin.³

Request the Pre-Move-Out Inspection

Once notice to end the tenancy has been given, the landlord must tell you in writing that you can ask for an initial inspection and that you have the right to be present.³ The inspection happens no earlier than two weeks before your move-out date, and the landlord must give at least 48 hours’ written notice of the time unless you both waive that in writing.

At the walk-through, the landlord identifies what they intend to deduct and gives you an itemized list. You then have the remaining days before move-out to fix those items yourself. Patch the wall. Clean the oven. Replace a broken blind. If you address something on the list, the landlord generally cannot deduct for it later. And if they missed something visible during the inspection, they typically cannot add new deductions for it after you leave.³ Skip the inspection and this protection goes away, so always request one.

The 21-Day Rule

After you vacate, the landlord has 21 calendar days to either return your full deposit or send an itemized statement of every deduction along with any remaining balance.¹ Each deduction has to state the reason and the dollar amount.

When deductions for repairs and cleaning exceed $125, the landlord must include copies of invoices or receipts showing the work, costs, and hourly or material rates.⁶ If the landlord or their employees did the work, the statement must describe what was done and how long it took. Deductions of $125 or less do not require receipts, but the itemized statement is required no matter the amount.

Delivery can be by first-class mail, personal delivery, or electronically if you both agreed to that in writing beforehand. Leave a forwarding address. Mail sent to the old apartment can still count as delivery, and you never see it.

Suing for a Wrongly Kept Deposit

If the landlord keeps money without justification, small claims court is the usual venue. Individuals can recover up to $12,500 there without an attorney.⁷

When a judge finds the landlord acted in bad faith, the court can award statutory damages of up to twice the deposit amount on top of the actual deposit owed back to you.¹ On a $2,000 deposit, the total judgment can reach $6,000: your $2,000 back plus $4,000 in penalties. The judge can award these damages when the facts support it even if you did not specifically request them.

The landlord, not you, has to prove that each deduction was reasonable and authorized.⁸ Landlords who cannot produce documentation tend to lose.

City Rules on Deposit Interest

California has no statewide rule requiring interest on deposits, but several cities do. Los Angeles requires landlords of rent-stabilized units to pay annual interest on deposits held at least a year. The Los Angeles Rent Adjustment Commission set the 2026 rate at 3.03%.⁹ The landlord can pay it directly or as a rent credit and must notify the tenant in writing of which method they chose. San Francisco, Berkeley, and West Hollywood have similar rules at different rates. If you live in a rent-controlled city, check with your local rent board.

1
California Legislative Information. California Civil Code – Section 1950.5
2
LegiScan. California Assembly Bill 12 – Tenancy: Security Deposits
3
California Legislative Information. California Civil Code Section 1950.5
4
Berkeley Rent Board. Important Changes to Security Deposit Law
5
California Apartment Association. New Law Limiting Security Deposits in Effect as of July 1
6
Santa Clara County Superior Court. California Civil Code 1950.5 – Security Deposits
7
California Courts. Small Claims in California
8
California Legislative Information. California Code, Civil Code – CIV Section 1950.5
9
Los Angeles Housing Department. Interest Payments on Security Deposits