Overview
California security deposit laws are governed by Civil Code Section 1950.5. Recent legislation (AB 12 and AB 2801) significantly changed the rules effective July 1, 2024, reducing the maximum deposit amount and adding new documentation requirements. California is known for strong tenant protections and serious penalties for landlord non-compliance. A security deposit compliance platform is essential for navigating these complex rules.
Maximum Security Deposit
As of July 1, 2024, California landlords may collect no more than one month's rent as a security deposit, regardless of whether the unit is furnished or unfurnished (Civil Code § 1950.5).
Small Landlord Exception
A limited exception exists for small landlords who meet both criteria:
- The owner is a natural person (or LLC where all members are natural persons)
- The owner owns no more than 2 residential rental properties with a combined total of 4 or fewer units
These small landlords may charge up to two months' rent as a security deposit.
Service Member Protections
If a landlord charges a service member tenant a higher deposit, they must specify the reason in the lease agreement. The additional amount must be returned within 6 months if the service member is current on rent.
Return Timeline
Landlords must return the security deposit within 21 days after the tenant vacates (Civil Code § 1950.5(g)).
If any deductions are made, the landlord must provide: (New York similarly requires—see New York security deposit laws.)
- An itemized statement listing each deduction
- Receipts or invoices for repairs over $125
- The remaining balance of the deposit
Failure to meet the 21-day deadline can result in forfeiture of the right to make deductions and potential penalties.
Interest Requirements
California state law does not require landlords to pay interest on security deposits. However, several major cities have local ordinances requiring interest payments:
San Francisco
Under SF Administrative Code § 49.2, all San Francisco landlords must pay interest on security deposits—even if the unit isn't covered by rent control.
- 2025 rate: 5.0% (March 1, 2025 - February 28, 2026)
- 2024 rate: 5.2% (March 1, 2024 - February 29, 2025)
- Interest must be paid annually on the anniversary of receiving the deposit
- Can be paid as cash or credited toward rent
- Landlords may deduct 50% of the Rent Board fee from the interest payment
Los Angeles
Under LAMC § 151.06.02, landlords of rent-stabilized (RSO) properties must pay interest on deposits held for at least one year.
- 2025 rate: 4.32%
- 2024 rate: 0.52%
- Must be paid monthly or annually (landlord's choice)
- Failure to pay can be used as a defense in eviction proceedings
Berkeley
Under Berkeley Municipal Code § 13.76.070, landlords subject to rent control must pay interest annually.
- 2025 rate: 0.9%
- 2024 rate: 1.2%
- Interest accrued through October 31 must be paid each December
- If not paid by January 31, tenant may deduct 10% of the deposit from rent
Other Cities
Santa Monica, West Hollywood, and other cities with rent control may also have interest requirements. Always verify local ordinances for properties in rent-controlled jurisdictions.
Allowable Deductions
Under Civil Code § 1950.5(b), landlords may only deduct for:
- Unpaid rent
- Cleaning to restore the unit to its move-in condition (not just general cleaning)
- Repair of damages beyond normal wear and tear caused by the tenant
- Other lease violations if specified in the rental agreement
Important: As of 2024, landlords cannot charge for carpet cleaning unless it's "reasonably necessary to return the premises to the condition it was in at the inception of the tenancy" (SB 611). Normal wear to carpets is not deductible.
AB 2801: Photo Documentation Requirements
California's Assembly Bill 2801, signed into law in September 2024, introduces comprehensive photo documentation requirements for security deposits. This is one of the most significant changes to California landlord-tenant law in years.
Move-Out Photos (Effective April 1, 2025)
Starting April 1, 2025, if a landlord intends to make any deductions from the security deposit, they must take photographs:
- Before repairs or cleaning: Document the condition that justifies the deduction
- After repairs or cleaning: Document the completed work
- Photos must be taken of any area for which deductions will be claimed
Move-In Photos (Effective July 1, 2025)
Starting July 1, 2025, landlords must photograph the rental unit immediately before or at the inception of the tenancy:
- Photos must document the unit's condition before the tenant moves in
- These baseline photos will be compared against move-out condition
- The law doesn't specify exactly which rooms/areas, but comprehensive documentation is recommended
What Photos Must Show
While AB 2801 doesn't prescribe exact standards, best practices include:
- All rooms, walls, ceilings, and floors
- Appliances and fixtures
- Windows, doors, and locks
- Any existing damage or wear
- Outdoor areas if included in the lease
- Timestamps on photos (metadata or visible date)
Sharing Photos with Tenants
Landlords must provide copies of photographs to the tenant:
- Move-in photos: Must be provided to tenant within a reasonable time
- Move-out photos: Must be included with the itemized statement within 21 days
- Photos can be delivered electronically or in hard copy
Record Retention
Landlords should retain all photo documentation for at least 4 years (the statute of limitations for contract disputes in California) or longer if any dispute is ongoing.
Consequences of Non-Compliance
Failure to comply with AB 2801's documentation requirements may:
- Prevent landlords from making valid deductions
- Expose landlords to statutory penalties (up to 2x the deposit)
- Weaken the landlord's position in any legal dispute
Pre-Move-Out Inspection Rights
Under Civil Code § 1950.5(f), tenants have the right to request an initial move-out inspection:
Landlord Obligations
- Notice requirement: Landlord must notify tenant in writing of their right to request an inspection
- Timing: Inspection must occur no earlier than 2 weeks before move-out
- Itemized statement: Landlord must provide a written itemization of proposed deductions
- Opportunity to cure: Tenant must be given a reasonable opportunity to fix issues before final move-out
Benefits of Pre-Move-Out Inspections
While inspections require additional effort, they can reduce disputes by giving tenants clear expectations and the chance to address issues proactively.
Penalties for Non-Compliance
California imposes significant penalties for security deposit violations:
- Wrongful retention: Up to twice the deposit amount in statutory damages, plus actual damages
- Bad faith retention: Courts may award the full statutory penalty for willful violations
- Missing documentation: Failure to provide required itemization or photos may result in forfeiture of the right to retain any portion of the deposit
A mishandled $2,000 deposit could expose a landlord to $4,000+ in liability.
Common Compliance Questions
When does the 21-day clock start?
The 21-day period begins when the tenant physically vacates AND returns all keys. If a tenant moves furniture out but hasn't returned keys, the clock hasn't started. Document the exact date and time you receive keys back. Many disputes center on this timing, so keep clear records.
Do I really need receipts for all deductions?
For deductions over $125, you must provide actual receipts or invoices—estimates alone won't suffice once work is completed. For smaller amounts, good-faith estimates are acceptable. However, best practice is to document everything with receipts regardless of amount. If you use in-house maintenance staff, create detailed invoices showing hourly rates and time spent.
Can I charge for repainting?
It depends on how long the tenant lived there and the condition of the walls. California courts generally consider paint to have a 2-3 year useful life. If a tenant lived in the unit for three years and the paint needs refreshing, that's normal wear and tear. But if they lived there six months and left crayon marks and holes, you can deduct for repainting. Pro-rate based on remaining useful life.
What about the initial inspection requirement?
You must offer the tenant an initial inspection within the last two weeks of tenancy. This gives them a chance to fix issues before final move-out. If the tenant requests the inspection, you must conduct it and provide an itemized statement of proposed deductions. The tenant then has the remaining time to remedy those issues. Skipping this step can weaken your position if deductions are disputed. Schedule a demo to see how Passive automates inspection workflows and documentation.