TL;DR
California Civil Code §1950.5 governs residential security deposits, and the headline rule changed on July 1, 2024: under Assembly Bill 12 (AB 12), a landlord may generally collect a security deposit of no more than one month's rent, whether the unit is furnished or unfurnished. This replaced the old limits of two months' rent (unfurnished) and three months' rent (furnished). There is a narrow small-landlord exception: a landlord who is a natural person, or a limited liability company whose members are all natural persons, and who owns no more than two residential rental properties totaling no more than four units, may collect up to two months' rent — but even that landlord is capped at one month's rent when the tenant is a service member. The deposit is refundable no matter what the lease calls it; §1950.5 prohibits any deposit or portion labeled "nonrefundable." After a tenant moves out, the landlord has 21 days to return the deposit or provide an itemized statement of deductions, and deductions are limited to unpaid rent, cleaning to the condition at move-in, and repair of damage beyond ordinary wear and tear. A landlord who retains a deposit in bad faith can be liable for the amount wrongfully withheld plus up to twice the deposit in statutory damages under §1950.5(l). The cap applies to deposits collected on or after July 1, 2024; leases signed before then are not retroactively changed. Deposit limits work together with the statewide rent cap that governs how much rent itself can rise.
What Civil Code §1950.5 covers
Civil Code §1950.5 is the single statute that governs almost every question about a residential security deposit in California: how much a landlord may collect, what the money may be used for, and how and when it must be returned. It applies to residential tenancies, and it defines "security" broadly — any payment, fee, or deposit a landlord requires at the start of a tenancy to cover defaults, damage, or cleaning counts as security, no matter what the lease calls it.
That broad definition matters because it stops landlords from relabeling a deposit to escape the rules. A "last month's rent" payment, a "cleaning fee," or a "move-in fee" that functions as security is treated as part of the deposit and counts against the statutory cap. The only common charge that falls outside the definition is a genuine application-screening fee.
The AB 12 cap: one month's rent
The most important recent change to §1950.5 came from Assembly Bill 12, effective July 1, 2024. Before that date, a landlord could collect up to two months' rent as a deposit on an unfurnished unit and up to three months' rent on a furnished unit, in addition to the first month's rent. AB 12 replaced both figures with a single limit: a landlord may generally collect no more than one month's rent as a security deposit, whether or not the unit is furnished, on top of first month's rent paid at or before move-in.
The change was designed to lower the up-front cost of renting, which under the old rule could reach three or four months' rent before a tenant received keys. The cap applies to security demanded or collected on or after July 1, 2024. A deposit lawfully collected before that date is not made unlawful retroactively; however, any new or additional security demanded or collected after that date must comply with the current cap. For how deposits interact with the broader body of tenant-protection rules, see our guide to the Costa-Hawkins Rental Housing Act.
The small-landlord exception
Section 1950.5 carves out one exception to the one-month cap. A landlord may collect up to two months' rent if both of these are true: the landlord is a natural person, or a limited liability company in which every member is a natural person; and the landlord owns no more than two residential rental properties that together contain no more than four dwelling units offered for rent.
The exception has an important limit of its own. Even a qualifying small landlord may collect no more than one month's rent when the prospective tenant is a service member, because service-member tenants are protected at the one-month level regardless of the landlord's size. The exception is meant to give genuinely small, individual owners a little more cushion against risk, not to reopen the old two- and three-month norms for larger operators.
| Situation | Maximum security deposit |
|---|
| General rule (most landlords), furnished or unfurnished | 1 month's rent |
| Small landlord: natural person / all-natural-person LLC, ≤2 properties and ≤4 units | 2 months' rent |
| Tenant is a service member (any landlord) | 1 month's rent |
No nonrefundable deposits
A core principle of §1950.5 is that a security deposit is always refundable. A lease may not designate the deposit, or any portion of it, as nonrefundable. This is why a "nonrefundable cleaning fee" written into a residential lease is unenforceable in California — if the charge functions as security, it is refundable and subject to the deposit cap.
The landlord holds the deposit as the tenant's money, subject to defined deductions, not as an up-front payment the landlord has earned. That framing drives every other rule in the statute: because the money still belongs to the tenant, the landlord must account for it, may deduct only for specific purposes, and must return the remainder on a strict timeline.
Permitted deductions and the 21-day rule
When a tenancy ends, §1950.5 allows the landlord to deduct from the deposit only for defined purposes: unpaid rent; cleaning the unit to the level of cleanliness it had at the start of the tenancy; repair of damage beyond ordinary wear and tear; and, if the lease allows, restoring or replacing personal property such as furniture. A landlord may not deduct for ordinary wear and tear, which is the natural deterioration that occurs with normal use.
Within 21 calendar days after the tenant moves out, the landlord must either return the full deposit or deliver an itemized written statement listing each deduction and its amount, together with any remaining refund. For deductions over a threshold amount, the landlord must include copies of receipts or invoices. A tenant also has the right to request an initial inspection before moving out, so any problems can be identified and fixed before they become deductions. For how these financial obligations compare with the deposit and fee structures inside common-interest developments, see our guide to the Davis-Stirling Common Interest Development Act.
Bad-faith retention and penalties
Section 1950.5(l) gives the deposit rules real teeth. If a landlord retains a security deposit in bad faith — for example, by keeping it with no itemized statement and no lawful basis — the landlord is liable for the amount wrongfully withheld and, in addition, may be assessed statutory damages of up to twice the amount of the security deposit. These bad-faith damages are on top of the actual deposit, not instead of it.
The penalty structure is why the 21-day statement is so important for landlords: providing a timely, itemized accounting with supporting documentation is the ordinary way to demonstrate good faith and avoid the doubling exposure. For agents advising clients on which of these obligations they can and cannot delegate, and the licensing structure behind that advice, see our guide to the DRE licensing structure.
Frequently Asked Questions
- How much can a California landlord charge for a security deposit?
- Since July 1, 2024, under Assembly Bill 12 and Civil Code §1950.5, most landlords may collect no more than one month's rent as a security deposit, whether the unit is furnished or unfurnished, in addition to first month's rent. This replaced the previous limits of two months' rent for unfurnished units and three months' for furnished units. A qualifying small landlord may collect up to two months, and service-member tenants are always capped at one month.
- What is the small-landlord exception?
- A landlord may collect up to two months' rent if the landlord is a natural person, or a limited liability company in which all members are natural persons, and owns no more than two residential rental properties containing no more than four units in total. Even then, if the tenant is a service member, the deposit is capped at one month's rent. The exception gives small individual owners more cushion but does not restore the old two- and three-month limits generally.
- Can a landlord charge a nonrefundable deposit or cleaning fee?
- No. Civil Code §1950.5 prohibits designating a security deposit, or any portion of it, as nonrefundable. A "nonrefundable cleaning fee" in a residential lease is unenforceable in California. Any charge that functions as security to cover defaults, damage, or cleaning is refundable and counts against the deposit cap. A genuine application-screening fee is the main charge that falls outside the deposit definition.
- How long does a landlord have to return the deposit?
- Within 21 calendar days after the tenant moves out, the landlord must return the full deposit or provide an itemized written statement of deductions along with any remaining refund. For deductions above a threshold amount, the landlord must include copies of receipts or invoices. Deductions are limited to unpaid rent, cleaning to the move-in condition, and repair of damage beyond ordinary wear and tear.
- What happens if a landlord wrongfully keeps the deposit?
- Under §1950.5(l), a landlord who retains a deposit in bad faith is liable for the amount wrongfully withheld plus statutory damages of up to twice the amount of the deposit. Those bad-faith damages are in addition to returning the deposit itself. Providing a timely, itemized 21-day statement with supporting documentation is how a landlord demonstrates good faith and avoids the doubling penalty.
- Does the one-month cap apply to my existing lease?
- The cap applies to security demanded or collected on or after July 1, 2024. A deposit lawfully collected before that date is not made unlawful retroactively. Any new or additional security demanded or collected after that date must comply with the current one-month cap.
Bottom Line
California Civil Code §1950.5 governs residential security deposits, and since July 1, 2024, Assembly Bill 12 caps the deposit at one month's rent for most landlords, furnished or unfurnished — down from the old two-month (unfurnished) and three-month (furnished) limits. A small landlord who is a natural person or all-natural-person LLC owning no more than two properties and four units may collect two months, but a service-member tenant is always capped at one month. No part of a deposit may be nonrefundable, and any charge functioning as security counts against the cap. The landlord must return the deposit or an itemized statement within 21 days, deducting only for unpaid rent, cleaning to move-in condition, and damage beyond ordinary wear and tear. Bad-faith retention exposes the landlord to the withheld amount plus up to twice the deposit under §1950.5(l). The cap governs security demanded or collected on or after July 1, 2024; it does not retroactively invalidate security lawfully collected before that date. For related California topics, see our guides to the Costa-Hawkins Rental Housing Act, the Davis-Stirling Common Interest Development Act, and the DRE licensing structure.
Source: California Civil Code §1950.5 (official text) · Cal. Civ. Code §1950.5 (FindLaw) · California DRE Reference Book — landlord-tenant