California Security Deposit Law: AB 12's One-Month Cap and AB 2801 Photo Rules

In California, most landlords can collect a security deposit of no more than one month's rent, and every upfront charge counts toward that cap, including pet deposits, key or cleaning fees and "last month's rent." The limit comes from AB 12 (Stats. 2023, ch. 733), applies to security collected on or after July 1, 2024, and is now in Civil Code section 1950.5(c). A small landlord can still collect up to two months' rent: a natural person (or an LLC whose members are all natural persons) who owns no more than two residential rental properties with no more than four units offered for rent in total. That exception does not apply when the tenant is a service member.

AB 2801 (Stats. 2024, ch. 280) added photo rules. Since April 1, 2025, you must photograph the unit after the tenant returns possession (before any repairs or cleaning you plan to deduct) and again after the work is done. For tenancies that began on or after July 1, 2025, you must also photograph the unit at move-in. You still have 21 calendar days after move-out to return the balance with an itemized statement.

This guide covers the two-month exception, what counts as "security," the photo and receipt rules, the 2026 electronic-refund change, penalties and a $2,800 worked example, as of October 2026.

The cap: one month's rent

Civil Code section 1950.5(c)(1) says a landlord may not demand or receive security, "however denominated," of more than one month's rent, in addition to the first month's rent paid on or before move-in. Before July 1, 2024, the limit was two months' rent for an unfurnished unit and three months' for a furnished one. The new cap applies to furnished and unfurnished units alike.

One narrow carve-out: the cap does not bar an advance payment of at least six months' rent when the lease term is six months or longer (section 1950.5(c)(2)).

The small-landlord exception (two months)

Under section 1950.5(c)(5), you may collect up to two months' rent if you meet both tests:

1. You are a natural person (including a settlor or beneficiary of a family trust) or an LLC whose members are all natural persons.
2. You own no more than two residential rental properties that collectively include no more than four dwelling units offered for rent.

A qualifying family trust is one whose settlors and beneficiaries are close relatives (section 1950.5(c)(5)(C)). A corporation, a partnership, or an LLC with an entity member does not qualify. Neither does an individual who owns three rental properties, even if the total is only three units.

The service member rule

The two-month exception does not apply if the prospective tenant is a service member (as defined in Military and Veterans Code section 400). You also may not refuse to rent to a service member because you can only collect one month (section 1950.5(c)(5)(B)).

Since April 1, 2025, if you charge a service member a higher-than-standard deposit because of credit or housing history, you must explain the amount and reason in writing by lease signing and return the extra after no more than six months if the tenant is current on rent; the lease must state that return date (section 1950.5(c)(4)).

Deposits collected before July 1, 2024

The cap "shall not apply to a security collected or demanded by the landlord before July 1, 2024" (section 1950.5(c)(6)). If you collected two or three months' rent under the old limits, you do not have to refund the difference. Security you demand after that date, including from a new tenant, is subject to the current cap.

What counts as "security"

Section 1950.5(b) defines security as any payment, fee, deposit or charge imposed at the start of the tenancy, whatever it is called, including advance rent:

The Department of Real Estate's 2026 tenant guide confirms there is no exception for pet deposits, key fees or cleaning fees. You also cannot call any part of the deposit "nonrefundable" in the lease (section 1950.5(n)).

For pet charges, see pet deposit vs pet fee vs pet rent; assistance animals are not pets.

What you can deduct

You may keep only the amounts "reasonably necessary" for four purposes (section 1950.5(b) and (e)):

1. Unpaid rent.
2. Repairing damage beyond ordinary wear and tear caused by the tenant or a guest.
3. Cleaning needed to return the unit to "the same level of cleanliness it was in at the inception of the tenancy."
4. Restoring or replacing personal property or fixtures, if the lease allows the deposit to be used for that.

You cannot charge for conditions that existed before the tenancy, for ordinary wear and tear, or for professional carpet cleaning unless it is reasonably necessary to restore move-in condition (section 1950.5(e)(2)). The cleanliness standard is relative to move-in, which is why move-in photos matter.

AB 2801 photo rules

AB 2801 added subdivision (g) to section 1950.5. It has two parts with different start dates:

If you deduct for repairs or cleaning, you must send these photos with the itemized statement, along with the written explanation of costs. You may deliver them by mail, email, flash drive or a link where the tenant can view them online (section 1950.5(h)(2)(D)).

Walk the unit room by room with a move-in/move-out checklist and keep date-stamped photos in one folder per tenancy. The move-in inspection checklist guide has a fuller walkthrough.

Before move-out: the initial inspection

When either side gives notice to end the tenancy, you must tell the tenant in writing that they can request an initial inspection (section 1950.5(f)). If they ask, you inspect no earlier than two weeks before move-out, with 48 hours' written notice, and leave an itemized list of proposed deductions the tenant can fix. Items you could have seen but did not list generally cannot be deducted later.

The 21-day deadline and itemization

No later than 21 calendar days after the tenant vacates, you must send an itemized statement of the deposit and any deductions and return the balance (section 1950.5(h)(1)). The California security deposit page has a deadline checker that counts the days from a move-out date.

With the statement, you must include:

• Your own labor: a description of the work, time spent and a reasonable hourly rate.
• A contractor's work or materials: a copy of the bill, invoice or receipt, plus the contractor's name, address and phone if the invoice lacks them.
• Photos taken under subdivision (g), for repair or cleaning deductions.

If a repair or invoice is not done within 21 days, you may deduct a good-faith estimate and send final documents within 14 days of completion (section 1950.5(h)(3)).

The $125 threshold

You do not have to attach receipts, invoices or photos if repair and cleaning deductions together total $125 or less, or if the tenant signed a valid waiver after notice to end the tenancy was given (section 1950.5(h)(4)). You still owe the itemized statement itself. And if the tenant asks for the documentation within 14 days of receiving the statement, you must provide it within 14 days of the request (section 1950.5(h)(5)).

What changed on January 1, 2026: electronic return

AB 414 (Stats. 2025, ch. 340) took effect January 1, 2026. If the tenant paid the deposit or rent electronically, you must return the balance electronically to an account the tenant designates in writing, or by another electronic method the tenant agrees to in writing, unless you and the tenant agree in writing on a different method such as a mailed check (section 1950.5(h)(1)(A)(ii)). You must also tell the tenant in writing, within a reasonable time after either side gives notice, that they have this right, unless you already have a written agreement on the return method.

Otherwise, return the money by personal delivery or first-class mail. You may email the itemized statement only if the tenant agreed, and with multiple adult tenants and no written agreement the default is one check payable to all of them.

AB 414 also relettered the statute. The 21-day rule that older guides cite as section 1950.5(g) is now in subdivision (h).

The bad-faith penalty

If you claim or keep any part of the deposit in bad faith, a court may award the tenant statutory damages of up to twice the deposit, in addition to actual damages, and you carry the burden of proving your deductions were reasonable (section 1950.5(m)). If you fail in bad faith to follow the return and itemization rules, you lose the right to keep any of the deposit (section 1950.5(h)(7)). Tenants can bring these claims in small claims court within its dollar limits (section 1950.5(o)).

Worked example: a $2,800 unit

A hypothetical example: you rent a two-bedroom for $2,800 a month, and the tenant has a dog.

At move-in.

If you are a standard landlord and want a $500 pet deposit, the security deposit can be no more than $2,300, so the total stays at $2,800. Collect the first month's $2,800 rent separately. Photograph the unit before the tenant moves in.

At move-out. The tenant paid rent by bank transfer and leaves on March 3. Your deadline to send the statement and refund is March 24. You find a dirty oven and stove ($150 from a cleaning service) and pet scratches on a door ($240 from a handyman to repair and repaint). Total deductions are $390, which is over $125, so you must attach both invoices, the before and after photos, and each provider's contact details if the invoice lacks them. You return $2,410 electronically, because the tenant paid electronically and you have no written agreement to use another method.

Check your city

Section 1950.5 does not require interest on deposits, but some California cities do, and local ordinances can add other rules. Check your city before you set or return a deposit. For the statewide picture, see California landlord-tenant law.

What to do now

• ☐ Confirm whether you qualify as a small landlord: count your residential rental properties and units, and check how each one is owned.
• ☐ Ask every applicant whether they are a service member before quoting a two-month deposit.
• ☐ Add up every upfront charge (deposit, pet deposit, key fee, "last month's rent") and keep the total at or under the cap.
• ☐ Remove any "nonrefundable" deposit or fee language from your lease. The California lease agreement page is a starting point.
• ☐ Photograph every unit at move-in, at move-out before any work, and after repairs or cleaning.
• ☐ Send the written notice of the tenant's right to a pre-move-out inspection when notice is given.
• ☐ If the tenant paid electronically, send the written notice of the right to an electronic refund, or sign a written agreement on another method.
• ☐ Calendar 21 days from move-out, and keep every invoice and receipt.
• ☐ Check your city for interest or other local deposit rules.

For a step-by-step return process that works in any state, see how to return a security deposit.

Sources

Official sources cited above (checked 2026-10-27):

• California Civil Code section 1950.5 (security deposits)
• AB 12 (2023), security deposits, Stats. 2023, ch. 733
• AB 2801 (2024), security deposits, Stats. 2024, ch. 280
• AB 414 (2025), security deposits, Stats. 2025, ch. 340
• California Attorney General, Know Your Rights: Security Deposits
• California Department of Real Estate, California Tenants guide (2026 edition)