Overview

California has some of the most tenant-friendly security deposit laws in the United States. As a landlord, understanding these regulations is crucial to avoid costly legal disputes and maintain compliance.

Security Deposit Limits

As of January 1, 2024, California law limits security deposits to:

  • Unfurnished units: Maximum of one month’s rent
  • Furnished units: Maximum of one month’s rent

Important: Prior to 2024, the limits were two months for unfurnished and three months for furnished units. The new law significantly reduced these amounts.

Exceptions

The new lower limits do not apply to:

  • Small landlords who own no more than two residential rental properties with a combined total of four or fewer units
  • Service members (who retain higher protections)

Allowable Deductions

California law permits landlords to deduct from security deposits for:

  1. Unpaid rent - Any rent owed at the end of tenancy
  2. Cleaning costs - To return the unit to the same level of cleanliness as move-in
  3. Repair of damages - Beyond normal wear and tear
  4. Restoration costs - If tenant fails to restore personal property per lease terms

Normal Wear and Tear

You cannot deduct for normal wear and tear, which includes:

  • Minor scuffs on walls
  • Worn carpet in high-traffic areas
  • Faded paint from sunlight
  • Small nail holes from hanging pictures

Return Timeline

California requires landlords to return security deposits within 21 calendar days after the tenant vacates.

Required Documentation

When returning (or partially returning) a deposit, you must provide:

  1. An itemized statement of deductions
  2. Copies of receipts for repairs or cleaning (if over $125)
  3. The remaining deposit amount, if any

Best Practices

To protect yourself legally:

  • Conduct thorough move-in and move-out inspections
  • Take dated photographs of the unit’s condition
  • Provide tenants with a move-in checklist
  • Keep all receipts for repairs and cleaning
  • Send deposit returns via certified mail

Penalties for Non-Compliance

Failure to comply with California security deposit laws can result in:

  • Return of the full deposit to the tenant
  • Up to two times the deposit amount in damages (bad faith)
  • Attorney’s fees and court costs

Conclusion

Staying compliant with California’s security deposit laws protects both you and your tenants. Relytical helps you track deposits, automate return timelines, and maintain proper documentation for every property.