| Quick Facts | Answer |
| Maximum / Limit | 1 Month’s Rent (with exceptions) |
| Receipt Requirement | None |
| Inventory Requirement | None |
| Interest Requirement | None |
To learn about laws on security deposit returns in California, click here.
Maximum Security Deposit Allowed in California
California law limits a security deposit to a maximum of one month’s rent, in most cases. There are a few common exceptions to this rule:
- A landlord can charge two months’ rent for a security deposit by meeting all the following conditions:
- The landlord owns no more than two residential rental properties, with a maximum of four units being offered to rent
- The landlord is the sole personal proprietor of the rentals, or operates through a limited liability company in which all members are natural (i.e., not corporate) persons
- The tenant is not a member of the state or federal armed services
- A landlord can charge an additional one-half of one month’s rent when renting to any tenant with a waterbed, plus a reasonable fee for administrative costs
For mobile homes, a security deposit is capped at two months’ rent.
Security deposits in California must be refundable. It’s illegal for lease agreements to have provisions stating that the deposits are nonrefundable.
Can Landlords Charge an Additional Pet Deposit in California?
In California, landlords can charge a pet deposit, except for service dogs, psychiatric service dogs, and emotional support animals. However, the total deposit on a rental cannot exceed one month’s rent in most cases. Landlords cannot get around this limit by dividing security deposit purposes under other names, like “pet deposit” or “damage deposit.”
A pet deposit may only be used for damage caused by the pet. California law does not prevent landlords from adding a monthly pet premium to the rental amount.
In some cities in California with rent control, the landlord may be required to petition their local rent board before adding a pet deposit to the security deposit of an existing lease, such as in Richmond and East Palo Alto. If your city has a rent board, check to see if a petition is required to add a pet deposit.
How Much Rent Can a Landlord Collect Upfront in California?
California landlords may collect rent in advance if they meet all the following conditions:
- The term of the lease is at least six months
- The amount of rent prepaid is at least six months’ worth
For leases shorter than six months, landlords can only collect the first month’s rent plus the security deposit.
If the landlord collects rent in advance labeled as “last month’s rent,” it is considered part of the security deposit.
Security Deposit Collections in California
When collecting a security deposit, landlords in California must allow the deposit to be paid in a form other than cash or electronic fund transfer.
Do Landlords Have To Provide a Receipt for the Security Deposit in California?
Landlords are not required to provide a receipt for the security deposit in California, although some states like Washington require a receipt.
What Obligations Do Landlords Have To Establish the Condition at Move-in in California?
California law does not have specific obligations before a tenancy. While other states like Washington have pre-tenancy obligations like a written inventory of damages, California does not.
Security Deposit Holdings in California
California law does not require landlords to hold security deposits separate from other funds. Some other states mandate how and where security deposits are held, but California does not.
Although some cities in California require that landlords pay interest on security deposits, they allow the landlord to choose how and where the security deposits will be held to gain interest.
Are Tenants Entitled to Interest on Their Security Deposit in California?
California law does not require landlords to provide interest on held security deposits, but some cities within California require that landlords pay interest including Berkeley, Los Angeles, Santa Cruz, and San Francisco.
Check your local laws to determine if tenants are entitled to interest on their security deposits in your area.
How Are Security Deposits Accounted for in California?
Security deposits are not considered taxable income when they are collected.
What Happens to a Security Deposit When the Property is Sold in California?
When a property is sold in California, the landlord must either transfer the security deposit to the new owner and handle it according to the same rules or return the security deposit to the tenant minus any allowable deductions.
Prior to the sale, the landlord must provide the new owner with a written statement containing the following information:
- The amount of the security deposit (after deductions)
- An itemized list of deductions made
- Whether they transferred the deposit to another account or returned it to the tenant
Whether the property is sold or not, landlords have 21 days to return the security deposit when the lease ends.
Sources
- 1 Ca. Civ. Code § 1950.5(c)(1)
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…a landlord may not demand or receive security, however denominated, in an amount or value in excess of an amount equal to one month’s rent, in addition to any rent for the first month paid on or before initial occupancy.
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Note that this law takes affect as of July 1, 2024. For rental agreements executed before that date, the default deposit maximum is two months’ rent.
Source Link - 2 Ca. Civ. Code § 1950.5(c)(4)(A)
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Notwithstanding paragraph (1), a landlord may not demand or receive security, however denominated, in an amount or value in excess of an amount equal to two months’ rent, in addition to any rent for the first month paid on or before initial occupancy if the landlord meets both of the following requirements:
(i) The landlord is a natural person or a limited liability company in which all members are natural persons.
(ii) The landlord owns no more than two residential rental properties that collectively include no more than four dwelling units offered for rent.
Source Link - 3 Ca. Civ. Code § 1940.5(g)
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[When renting to a tenant with a waterbed,] an owner or owner’s agent is entitled to increase the security deposit on the dwelling unit in an amount equal to one-half of one months’ rent. The owner or owner’s agent may charge a tenant, lessee, or sublessee a reasonable fee to cover administration costs.
Source Link - 4 Ca. Civ. Code § 798.39(a)
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The management [of a mobile home rental] may only demand a security deposit on or before initial occupancy and the security deposit may not be in an amount or value in excess of an amount equal to two months’ rent that is charged at the inception of the occupancy, in addition to any rent for the first month. In no event shall additional security deposits be demanded of a homeowner following the initial occupancy.
Source Link - 5 Ca. Civ Code § 1950.5(m)
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No lease or rental agreement may contain a provision characterizing any security as “nonrefundable.”
Source Link - 6 Ca. Civ Code § 1950.5(c)(2)
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This subdivision does not prohibit an advance payment of not less than six months’ rent if the term of the lease is six months or longer.
Source Link - 7 Ca. Civ Code § 1947.3(a)(1)
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[By default]… a landlord or a landlord’s agent shall allow a tenant to pay rent and deposit of security by at least one form of payment that is neither cash nor electronic funds transfer.
Source Link - 8 Ca. Civ Code § 1950.5(h)
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Upon termination of the landlord’s interest in the premises, whether by sale, assignment, death, appointment of receiver, or otherwise, the landlord or the landlord’s agent shall, within a reasonable time… Transfer… [or] Return the portion of the security remaining after any lawful deductions made under subdivision (e) to the tenant.
Source Link
