Security deposit handling is one of the most regulated—and litigated—aspects of California landlord-tenant law. The rules changed significantly in 2024 with the passage of AB 12, and violations can result in penalties up to three times the deposit amount. Understanding these requirements isn't optional; it's essential for protecting yourself as a Bay Area landlord where deposits often exceed $3,000.
Disclaimer
This article provides general information only and does not constitute legal advice. Laws change frequently. Consult with a qualified attorney for specific legal guidance.
Security Deposit Limits (2024 Changes)
As of July 1, 2024, California law (AB 12) limits security deposits to one month's rent for most residential properties. This represents a dramatic change from previous law that allowed two months for unfurnished and three months for furnished units.
Previous Law (Before July 2024)
- • Unfurnished: Up to 2 months' rent
- • Furnished: Up to 3 months' rent
- • No distinction for landlord size
Current Law (AB 12)
- • Standard: Maximum 1 month's rent
- • Furnished or unfurnished—same limit
- • Small landlord exception available
Small Landlord Exception
A limited exception exists for small landlords who meet ALL of these criteria: own no more than two residential rental properties, properties contain no more than four units total, and the landlord is a natural person (not a corporation, LLC, or other entity). Small landlords meeting these requirements may charge up to two months' rent as security deposit.
Military Member Protections
Active duty military members receive additional protections under California law. Security deposits for military tenants are always limited to one month's rent regardless of landlord size or property type. This applies even if the landlord would otherwise qualify for the small landlord exception. Service members with poor credit history cannot be charged additional deposit.
What Security Deposits Can Cover
California Civil Code Section 1950.5 specifically limits what landlords can deduct from security deposits. Allowable deductions include:
- Unpaid rent: Any rent owed at move-out, including prorated amounts
- Cleaning costs: To return the unit to move-in condition (not cleaner than move-in)
- Damage repair: Damage caused by the tenant beyond normal wear and tear
- Other lease violations: Costs resulting from tenant breach of lease terms
Important: You cannot charge for damage that existed at move-in (which is why documentation is critical), normal wear and tear regardless of how the unit looks, or cleaning beyond move-in condition.
Normal Wear and Tear vs. Tenant Damage
This distinction is crucial and the source of most security deposit disputes. Courts interpret these categories as follows:
Normal Wear & Tear (NOT Deductible)
- • Minor scuffs and marks on walls
- • Worn carpet in high-traffic areas
- • Faded or slightly dirty paint
- • Loose door handles from normal use
- • Small nail holes from hanging pictures
- • Minor marks around light switches
- • Faded window treatments from sunlight
- • Worn finish on wood floors in walkways
Tenant Damage (Deductible)
- • Large holes in walls
- • Stained, burned, or torn carpet
- • Broken windows, doors, or fixtures
- • Pet damage (stains, scratches, odors)
- • Excessive dirt requiring professional cleaning
- • Unapproved paint colors
- • Missing fixtures or appliance parts
- • Water damage from tenant negligence
Documentation Is Essential: Thorough move-in documentation with dated photos and video establishes baseline condition. Without it, proving damage versus wear becomes extremely difficult. California courts consistently favor tenants when landlord documentation is inadequate.
The 21-Day Return Requirement
Landlords have exactly 21 calendar days from the date the tenant vacates to either return the full deposit or provide:
- A written itemized statement explaining all deductions
- Copies of receipts or invoices for completed repairs
- Good-faith estimates for repairs not yet completed
- The remaining deposit balance (check made out to tenant)
The 21-day clock starts when the tenant actually vacates and returns keys, not the lease end date. If using estimates because work isn't complete, you must provide actual receipts within 14 days of work completion and return any difference if actual costs were lower than estimated.
Itemized Statement Requirements
The itemized statement must be specific and detailed. General descriptions like "cleaning" or "repairs" are insufficient. Instead, describe each item specifically: "Professional carpet cleaning - living room and bedrooms due to pet stains - $250." Include the vendor name, service performed, and cost for each deduction. For repairs over $126, you must include the receipt or invoice.