Key Takeaways

• California limits security deposits to one month’s rent in most cases, with some exceptions.

• Landlords can deduct unpaid rent, excessive damage, and cleaning costs from a deposit.

• Security deposits must be returned within 21 days after a tenant moves out.

As a landlord, requiring a security deposit is one of the most effective ways to protect your rental property investment. A deposit helps cover financial risks such as missed rent payments, property damage, or professional cleaning costs. 

At Beyond Property Management, we understand the importance of staying compliant with California’s security deposit laws to protect both landlords and tenants.

In this guide, we’ll walk you through the key rules and exceptions you should know about security deposits in California. Following these laws helps minimize misunderstandings, prevent legal issues, and ensure smoother landlord-tenant relationships.

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Here is a Guide to California Security Deposit Law

The following sections outline the main rules landlords must follow when collecting and managing security deposits in California.

Maximum Limit

California law generally prohibits landlords from charging more than one month’s rent as a security deposit. For example, if the monthly rent is $2,000, the maximum allowable deposit is also $2,000.

There are a few exceptions to this rule:

• Small landlords: You may charge up to two months’ rent if you meet all of the following conditions:

  • You own no more than two residential properties, with each property having no more than four rental units.

  • You operate as a sole proprietor or through an LLC.

  • You are not a member of the armed forces.

• Waterbeds: If a tenant has a waterbed, you may charge up to 1.5 times the monthly rent, plus a reasonable administrative fee.

• Servicemembers: Beginning April 1, 2025, landlords may collect a deposit exceeding one month’s rent from servicemembers if the tenant has a poor housing history or credit rating. However, the excess must be refunded within six months of move-in.

Additional Pet Deposits

California law allows landlords to charge an additional deposit for tenants with pets. However, the combined total of the regular deposit and pet deposit cannot exceed the one-month limit.

Tenants with service animals, psychiatric service dogs, or emotional support animals are exempt from paying extra deposits under the Fair Housing Act (FHA) and the Americans with Disabilities Act (ADA).

Pet deposits can be used to cover excessive damage caused by the animal beyond normal wear and tear.

Holding of Security Deposits

Unlike some states, California does not regulate how landlords must hold security deposits. You may store the funds in any manner you choose, provided they are available to return at the end of the tenancy or in the case of eviction.

That said, certain cities, such as San Francisco, Berkeley, Santa Cruz, and Los Angeles, require landlords to place deposits in interest-bearing accounts. Always check local regulations in addition to state law.

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Sale of Rental Property

If you sell a rental property in California, you have two options regarding the tenant’s security deposit:

1. Transfer the deposit (minus allowable deductions) to the new owner, who then assumes responsibility for it.

2. Return the deposit to the tenant directly, minus any lawful deductions.

Security Deposit Deductions

Landlords may deduct only specific costs from a tenant’s security deposit:

• Unpaid rent after the tenant vacates.

• Excessive property damage beyond normal wear and tear.

• Professional cleaning costs needed to restore the unit.

• Costs for restoring the unit if required under the lease agreement.

There is no cap on the deduction amount, but charges must be reasonable and well-documented.

Normal Wear and Tear vs. Damage

Understanding the difference between normal wear and tear and actual damage is essential for avoiding disputes under the California landlord-tenant law.

• Normal wear and tear: Gradual deterioration from everyday use, such as loose doorknobs, gently worn carpet, or lightly soiled grout.

• Damage: Harm caused by tenant negligence or misuse, such as holes in the walls, missing fixtures, or broken tiles.

Return Deadline

Landlords must return a tenant’s security deposit within 21 days after move-out, minus any lawful deductions.

If deductions are made, landlords must provide an itemized written statement that details each charge. Tenants also have the right to request a move-out inspection within the final 14 days of the lease, giving them the opportunity to address issues before deductions are made.

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Bottom Line

Security deposit laws are a critical part of California’s landlord-tenant regulations. By following these rules, landlords can protect their investments, maintain transparency with tenants, and avoid unnecessary disputes.

At Beyond Property Management, we specialize in helping San Diego landlords stay compliant while maximizing their rental income. If you need expert property management support, contact us today to learn how we can make rental ownership easier and more profitable.

Disclaimer: This article is provided for informational purposes only and should not be considered legal advice. For guidance specific to your situation, please consult a qualified attorney or legal professional.