Since July 1, 2024, most California landlords can collect only one month’s rent as a security deposit, furnished or not. A narrow exception lets some small owners collect two months, but one month is the default, and getting it wrong exposes you to disputes and penalties. If you own rentals in Los Angeles or anywhere in the state, here is what the law allows and how we set deposits up to stay clean.
The one-month rule under AB 12
AB 12 amended California Civil Code Section 1950.5 and set a single cap for residential rentals: a security deposit may not exceed one month’s rent. The old split, where an owner could charge two months for an unfurnished unit and three months for a furnished one, is gone. The cap covers everything you hold as a deposit, whether you call it a security deposit, a pet deposit, a cleaning deposit, or a key deposit. Add those together and the total cannot cross one month’s rent.
The rule applies to deposits collected after July 1, 2024. Deposits you lawfully collected before that date can stay in place, but any new tenancy or new deposit follows the one-month cap. Raising an existing tenant’s deposit to match a rent increase is not a workaround, because the cap still governs.
The small-owner exception, and where it stops
There is a limited carve-out. You may charge up to two months’ rent if both of these are true: you are a natural person, an LLC whose members are all natural persons, or a family trust; and you own no more than two residential rental properties that together hold no more than four dwelling units. [VERIFY current statutory wording if you plan to rely on this exception.]
One catch matters in a market with military families. Even if you qualify for the exception, you can charge only one month’s rent when the tenant is a service member. When in doubt, default to one month. The exception is narrow, and the extra cushion is rarely worth the risk of getting the qualification wrong.
What overcharging can cost you
The downside is real money, not a warning letter. Collect more than the law allows and a tenant can demand the excess back, and disputes over deposits are among the most common landlord and tenant fights that reach small claims court. Mishandle the deposit at move-out and the exposure grows. Under Civil Code 1950.5, a court can award a tenant up to twice the amount of the deposit in statutory damages when an owner keeps it in bad faith, on top of any actual damages. [VERIFY exact penalty language before quoting it to a tenant.] Charging the right amount and documenting the rest is far cheaper than defending either mistake.
What did not change: returns and deductions
The back-end rules you already followed still apply. You have 21 days after the tenant moves out to return the deposit or send an itemized statement of what you kept and why. You can deduct for unpaid rent, cleaning to the condition at move-in, and repair of damage beyond normal wear and tear. You cannot charge for ordinary aging like faded paint or carpet worn from normal use.
Documentation is where owners win or lose disputes. California has tightened expectations around photo evidence for deductions, so photograph the unit at move-in, at move-out, and after any repair, and keep your receipts. [VERIFY: confirm current photo-documentation timing rules under recent legislation before citing specifics.] In Los Angeles, remember that local rules can sit on top of state law, so check any city rent-stabilization or just-cause requirements that apply to your building.
How we set deposits up
If this were our unit, we would keep the deposit at one month’s rent even where the exception might allow two. A smaller deposit widens your applicant pool, speeds lease-up, and removes any argument about whether you qualified for the carve-out. The lost cushion is small next to the cost of a vacancy or a deposit dispute.
A one-month deposit also puts the weight on the front end, where it belongs. Your real protection is not a bigger deposit; it is a qualified tenant and a clear paper trail. Screen consistently and within fair-housing lines, as we cover in our tenant screening guide, then make the deposit terms explicit in the lease, run a documented move-in walkthrough, and hold the deposit cleanly so it is ready to return on time. Our guide to a strong lease agreement in Los Angeles covers the language, and our landlord responsibilities guide covers the wider duty set. New owners can start with our first-time landlord guide to California.
Frequently asked questions
How much can a California landlord charge for a security deposit in 2026?
One month’s rent for most landlords. Certain small owners may charge up to two months, and only one month if the tenant is a service member.
Does the one-month cap include a pet deposit or last month’s rent?
Amounts held as security count toward the cap. Prepaid last month’s rent that is truly rent is treated differently, so label each amount clearly in the lease and confirm your structure. When unsure, keep the total at one month.
How long do I have to return a deposit in California?
21 calendar days after the tenant vacates, with an itemized statement for any deductions and, where required, supporting documentation.
Does AB 12 apply to deposits collected before July 1, 2024?
No. Deposits lawfully collected before that date can remain as they were. The cap governs new deposits and new tenancies going forward.
When you want a second set of eyes on your deposit terms or your whole tenancy setup, get in touch.
This article is general information, not legal advice. Landlord and tenant rules change and local ordinances can add requirements, so confirm your situation with a qualified attorney, or with us, before you act.