California law regarding residential security deposits is found at California Civil Code §1950.5.

A summary of applicable law is below.

Security Deposit Maximums

On or after July 1, 2024:
As a result of AB 12, the maximum amount for landlords will be limited to one month deposit regardless of whether it is furnished or not furnished. There is a limited exception for property owners who are either natural persons or limited liability companies in which all members are natural persons AND they own no more than two parcels of land with no more than four units offered for rent. If a property owner meets this exception, they will be permitted to have a two month maximum deposit. A landlord is permitted to retain a deposit in excess of the one-month limitation as long as it was legal at the time, and it was requested and received prior to July 1, 2024. Landlords are permitted an additional half-month’s rent if there is a waterbed. This still likely be limited to a one-month deposit total.

Collecting the Security Deposit
Last month’s rent, pet deposits, key deposits, cleaning deposits and any other “deposits” for potential future losses are all considered to be a part of the security deposit. When totaled, they may not exceed the legal maximum as stated above. Some courts allow itemized deposits to be
used only for the stated purpose (i.e. some courts might rule that a pet deposit can only be used for pet damage). Therefore, a single general security deposit is recommended over separate deposits for particular items to avoid exceeding the statutory maximum and to ensure the
landlord’s ability to use all deposits for any loss. A landlord may have different security deposit amounts for different tenants, depending on whether they have pets or conditional deposits. The law does not permit “nonrefundable” deposits of any kind, such as an automatic deduction
for flea spraying when there has been a pet; if a tenant fully complies with the lease, the tenant should receive back 100% of the tenant’s security deposit.

Protections for Servicemembers
For military members the maximum amount for a security deposit will always be limited to one month security deposit even if the property manager meets the exception above which permits a two month maximum. A landlord may not refuse to rent to a servicemember due to the reduced security deposit.

There are additional requirements if a landlord wants to charge a higher deposit than is standard or advertised to a military member beginning April 1, 2025. If the standard or advertised price for a security deposit is less than one month and as a result of the application process the landlord wants to increase the deposit due to any reason, the landlord must provide the tenant with a written statement, on or before the date the lease is signed, of the amount of the higher security and an explanation why the higher security amount is being charged. The
reason may include but it is not limited to due to the credit history, credit score, housing history, or other factors related to the tenant. The additional amount of security shall be returned to the tenant after no more than six months of residency if the tenant is not in arrears for any rent due during that period. The date for return of the additional amount of security shall be included in the lease agreement.

Uses of the Security Deposit
Under Section 1950.5(b)(1-4) the security deposit may be used:

• For unpaid rent;
• To repair damages to the premises, not including ordinary wear and tear, caused by the tenant or by a guest or licensee of the tenant;
• To clean the premises to return it to the same level of cleanliness it was in when the tenant moved in; and
• To restore, replace, or return personal property or appurtenances, exclusive of ordinary wear and tear, if the rental agreement authorizes this use of the security deposit.

The express terms of the security deposit law do not list other items but indicate this list may not be complete.

Photo Requirements
In order to prove that a landlord is using the security deposit to repair damage or clean to bring the unit to the original condition and not subsidizing repairs, the State has amended the law to make sure there is proof of the condition, damages and repairs through a photo requirement.

Commencing July 1, 2025, landlords will now be required to take photos of the premises immediately before or at the inception of the tenancy to establish the condition of the premises.

Beginning April 1, 2025, the landlord will be required to take photos of the unit within a reasonable amount of time of possession being returned to the landlord, and prior to any repairs or cleaning. Thereafter, the landlord must take additional photos of the unit after the cleaning
and repairs have been completed. If any deductions are made from the security deposit for cleaning or damages, the landlord will need to provide the traditional itemization of deductions but must also include the photos along with a written explanation of the cost of the allowable
repairs or cleaning. The photos may be sent by mail, email, computer flash drive or by providing a link where the photos may be reviewed online.

Pre-Move Out Inspections
Within a reasonable time after either the landlord or the tenant gives notice of termination of the tenancy or before the end of the lease term, the landlord must generally notify the tenant in writing of the tenant’s option to request a pre-move out inspection and of the tenant’s right to be present at the inspection. [No notice of the resident’s right to a pre-move out inspection is
required if the landlord has served the resident with a three-day notice because of the resident’s failure to pay rent, violated a provision of the lease, materially damaged the property, committed a nuisance, or used the property for an improper purpose.] If the tenant fails to request an inspection the landlord’s obligation to do an inspection is discharged.

If the pre-move out inspection is requested by the tenant, the landlord must inspect the premises during the final two weeks of the tenant’s occupancy. The landlord and tenant must attempt to schedule the inspection at a mutually acceptable date and time. The landlord must give at least 48 hours prior written notice of the date and time of the inspection if a time is agreed upon, or if the parties can’t agree on a time, but the tenant still desires to have an inspection. The tenant and landlord may waive the 48-hour prior written notice by both signing a written waiver. Once the tenant has requested the inspection, the landlord must carry out the inspection (after giving the 48-hour notice or receiving the waiver), whether or not the tenant is present for the inspection, unless the tenant withdraws their request for the inspection. The notice must include the quoted text of California Civil Code §1950.5(f).

After inspection, the landlord must give the tenant an itemized statement identifying cleaning or repairs that will cause security deposit deductions if they are not completed before the tenant vacates. This statement shall also quote the permitted reasons for deductions as permitted in section 1950.5(b)(1)-(4). The statement shall be given to the tenant, if the tenant is present for the inspection, or shall be left inside the premises. After the pre-move out inspection, the tenant may remedy identified deficiencies (if allowed under the lease), to avoid deductions from the security deposit. The landlord may make security deductions for items not included in the itemized statement if the damages occurred after the inspection, or if the deficiencies were not identified during the pre-move out inspection because they were hidden by the tenant’s possessions.

Amortizing Costs
Many judges expect landlords to amortize the cost of big-ticket items (such as paint and flooring) evenly over the life expectancy of the item and charge a tenant only a portion of the cost as appropriate. For example, if the life expectancy of carpet is sixty months, and a landlord must replace it after thirty-one months because of damage caused by a tenant, the landlord would charge the tenant only 29/60ths of the cost. To determine the life expectancy of an item, landlords should check with their vendor. Typical life expectancy for wall paint is 2-5 years (more for a glossy paint, and less for a flat paint). Typical life expectancy for a carpet is 5-7 years.

Lease Language
California Civil Code §1950.5 allows landlords to use the security deposit to repair, replace or restore personal property only if the rental agreement specifically authorizes this application. Landlords who want to maximize their ability to use the security deposit for any purpose allowed by law can insert the following provision (modeled after Civil Code §1950.5) in their leases:

The security deposit may be used for any purpose allowed by law, including to compensate Landlord for Resident’s default in rental payments, to repair damages to the premises (exclusive of ordinary wear and tear) caused by Resident, guests, and other household members, to clean the premises, and to remedy future defaults by Resident in any obligation under the rental agreement, including the obligation to restore, replace or return personal property or appurtenances, exclusive of ordinary wear and tear.

Returning the Security Deposit
Unless a shorter time is specified in the lease or rental agreement, a landlord has 21 days to provide a final accounting and return the balance of the resident’s security deposit. The time begins when the landlord regains possession of the property. This final “disposition of the security deposit” accounting must be personally delivered or sent by first-class mail, postage prepaid, to the last known address of the resident. Often this means mailing it to the premises the resident just vacated. If it is returned by the Post Office, the landlord should keep the original, plus a copy of the unopened return envelope, as proof that the accounting was mailed within the prescribed time. If the returned mail has a forwarding address, the security deposit accounting and refund should be sent to that address.