California landlords have fewer tenant conflicts when they understand California security deposit laws, as doing so helps them avoid issues like missed deadlines, improper deductions, and end-of-tenancy disputes.
In this guide, you’ll learn everything you need to know regarding these regulations, including maximum amounts landlords can request, how to store deposits, whether landlords must pay interest, legal reasons to deduct, returning deposits, handling disputes, and more.
Statutes Regulating California Security Deposits
California’s security deposit rules live within California Civil Code Section 1950.5, which outlines how landlords collect, hold, deduct from, and return residential security deposits.
Maximum Security Deposit Amounts Under California Law
California law now limits most landlords to collecting no more than 1 month’s rent as a security deposit, whether the unit is furnished or unfurnished, and no matter the lease type or length. These statewide caps apply across nearly all residential rental arrangements.
California also includes a few important exceptions. Small housing providers who own no more than two properties with a combined total of 4 units or fewer may collect up to 2 months’ rent. Active-duty service members receive additional protections that cap their deposit at 1 month’s rent, even when renting from a small housing provider. California cities do not set separate local caps that override state law.
Security Deposit Storage Regulations
California law does not require landlords to place security deposits in a specific account, pay interest, or issue storage notices. Since the statutes set no formal rules, landlords may decide how to hold these funds, as long as they protect the deposit and comply with all return and deduction requirements.
Security Deposit Interest in California
California landlords do not have to place security deposits in interest-bearing accounts, and state law does not require them to pay tenants any interest on those funds.
Making Security Deposit Deductions
Security deposit deductions help landlords protect the long-term condition of a rental property. Tenants sometimes leave damage beyond normal wear and tear, and landlords need access to funds to complete repairs that return the unit to its original condition and keep the property in reliable working order.
When Landlords Can Deduct
California landlords may draw from a tenant’s security deposit to:
- Repair damage beyond normal wear and tear caused during the tenancy.
- Cover unpaid rent owed through the date the tenant moves out.
- Pay for cleaning needed to return the unit to its prior cleanliness.
- Replace items listed in the rental agreement that the tenant removed.
- Address costs to reverse unauthorized alterations made during the tenancy.
When Landlords Can’t Deduct
California landlords may not draw from a tenant’s security deposit to:
- Resolve damage or conditions that existed before the tenant moved in.
- Cover routine maintenance that landlords must provide under state law.
- Address deterioration caused by typical aging and everyday use.
- Charge for upgrades that improve the rental beyond its previous condition.
- Pay for ordinary wear that results from reasonable and permitted daily activities.
Returning Security Deposits to Tenants
California law outlines clear rules for returning any remaining portion of a tenant’s security deposit after the landlord makes all eligible deductions.
Required Timeline for Return
California landlords must return a tenant’s security deposit within 21 calendar days after the tenant vacates and hands back possession of the unit. The 21-day window begins once the tenant moves out, and landlords must send any remaining funds, along with the required itemized statement, during this period.
Method for Return
California landlords typically return the deposit by check or another method both parties agree to use. Landlords must include an itemized list of deductions and, when needed, receipts or good-faith estimates for repairs. This documentation shows how the final amount was calculated and meets state accounting rules.
Penalties for Late Return
California landlords who miss the 21-day deadline or provide incomplete documentation may be responsible for any amount wrongfully withheld. If a court determines the landlord acted in bad faith, it may order statutory damages of up to twice the amount of the security deposit.
Security Deposit Disputes
If a tenant disagrees with how a landlord handles their security deposit, the tenant has every right to raise a dispute. Most tenants start by requesting clarification in writing, and if the issue remains unresolved, they may pursue mediation, file a complaint, or take the issue to small claims court.
As a landlord, prepare for security deposit disputes by using a move-in and move-out checklist, staying on top of accounting and bookkeeping, and including clear terms within your lease agreement. Strong documentation, familiarity with California laws, and consistent attention to required timelines also help prevent misunderstandings and support your position if a dispute arises.
Using Condition Reports to Document Damage
When managing security deposits in California, landlords gain significant clarity by using thorough move-in and move-out condition reports with every new and departing tenant. These condition reports outline the unit’s condition at each stage, reduce disagreements, and simplify a landlord’s workflow by creating a dependable record to support any necessary deductions.
Landlords also benefit from using property management software to generate digital reports, including photos and videos, directly from their smartphones. By documenting a property’s condition before move-in and after move-out, landlords create a clear record that makes security deposit deductions easier to defend.
Sign up for a free TurboTenant account to streamline your inspection process and keep all documentation organized in one central location.
FAQs: California Security Deposit Law
Can a landlord deduct painting from a security deposit in California?
A California landlord may deduct painting costs only when a tenant leaves damage that goes beyond normal wear and tear. Routine repainting from standard turnover does not qualify, but excessive marks, stains, or clear misuse generally support a valid deduction.
Are nail holes considered normal wear and tear in California?
Most small nail holes count as normal wear and tear in California, so landlords cannot deduct for minor picture-hanging holes. Larger holes, many holes in one area, or damage from improper hardware installation may exceed normal wear and tear and warrant a repair charge.
Who has to pay for carpet cleaning in California, the landlord or the tenant?
California landlords may charge tenants for carpet cleaning only when the tenant leaves excessive dirt or damage beyond normal wear and tear. Routine cleaning tied to standard turnover remains the landlord’s responsibility and cannot be deducted from the tenant’s security deposit.
What happens if a landlord doesn’t return a security deposit within 21 days in California?
If a California landlord fails to return the security deposit within 21 days, the landlord may owe the amount wrongfully withheld. If a court finds the landlord acted in bad faith, it may award the tenant additional statutory damages of up to twice the deposit.
