California Security Deposit Collections and Holdings

California Security Deposit Collections and Holdings

Last Updated: April 11, 2024 by Roberto Valenzuela

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. These are the 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

In no circumstance can the security deposit for a mobile home exceed two months’ rent.

Security deposits in California must be refundable. Lease agreements cannot contain 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 BerkeleyLos AngelesSanta 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.