California’s regulations governing security deposits, found in Civil Code § 1950.5, represent some of the most comprehensive and frequently disputed landlord-tenant provisions in the state. These rules dictate deposit limits, permissible uses, and specific requirements for returning funds to tenants.
Following significant legislative updates that became effective in July 2024, April 2025, and July 2025, property owners and renters alike must grasp the law’s actual requirements and recognize which errors can lead to substantial penalties.
Defining a “Security Deposit” Under California Law
According to Civil Code § 1950.5(b), a “security” encompasses any payment received when a tenancy begins, regardless of its label. This includes:
- Traditional security deposits
- Cleaning deposits
- Advance payment of “last month’s rent”
- Any charge designed to cover future damage, cleaning, or nonpayment (such as “pet deposits” or “cleaning fees”)
Property owners cannot circumvent the statute by using alternative terminology. If a payment functions as a security deposit, the law treats it as one.
Permitted Uses for Security Deposits
Landlords may only withhold amounts that are reasonably required for:
- Outstanding rent payments
- Repairs for damage exceeding normal wear and tear
- Cleaning needed to restore the unit to its move-in condition
- Restoration or replacement of the landlord’s property when the lease specifically authorizes it
Conversely, property owners cannot deduct costs for:
- Normal wear and tear
- Damage that existed before the tenant moved in
- Property upgrades or improvements
- Professional carpet or cleaning services unless truly necessary
Deposit Amount Limitations
Standard Limit (effective July 1, 2024): Most property owners can collect a maximum of one month’s rent as a security deposit.
Small Landlord Exception: Property owners may charge up to two months’ rent only when:
- The landlord is an individual person (or qualifying family trust/LLC)
- The landlord owns two properties or fewer with a combined total of four units or less
Military Service Member Protections: The two-month exception does not apply to service members. Additionally:
- Higher deposits for service members must include written justification
- Any additional deposit amount must be refunded after six months if the service member remains current on rent
Civil Code § 1950.5(n) explicitly prohibits lease clauses designating deposits as “nonrefundable.” All security deposits must be refundable, with deductions limited to lawful purposes.
Pre-Move-Out Inspection: An Important Tenant Protection
Tenants have the right to request a pre-move-out inspection, enabling them to address issues and prevent deposit deductions. Property owners must:
- Inform tenants in writing about this right
- Schedule the inspection within the final two weeks before move-out
- Supply an itemized list of anticipated deductions
When landlords conduct this inspection, they typically cannot deduct for items not identified during it, unless:
- The damage happened after the inspection
- The tenant’s belongings prevented discovery during the inspection
Updated Photo Documentation Rules (2025)
For tenancies starting on or after July 1, 2025, landlords must now:
- Take photographs at or before tenant move-in (failure to do so prohibits future deductions)
Beginning April 1, 2025, property owners must also:
- Photograph the unit after the tenant moves out (before any repairs or cleaning)
- Photograph again after completing repairs or cleaning
- Provide these photos to the tenant with the deposit accounting if any deductions are made
The Strict 21-Day Return Deadline
Within 21 calendar days following tenant move-out, landlords must:
- Return any unused deposit funds to the tenant
- Provide an itemized accounting of any deductions
- Include receipts, invoices, estimates, or detailed explanations for deductions
- Include supporting photographs for any charges
Failure to comply strictly with these requirements can:
- Eliminate the landlord’s ability to retain any deposit portion
- Entitle the tenant to double their deposit amount, or
- Allow recovery of up to triple the deposit if the owner’s failure was malicious
When Repairs Cannot Be Completed in Time
If repairs cannot reasonably be finished within the 21-day window, property owners may:
- Provide a good-faith cost estimate
- Submit final documentation within 14 days of completing the work
However, all estimates must still be reasonable and well-supported.
Conclusion
California’s security deposit regulations are deliberately protective of tenants and increasingly focused on documentation requirements. Property owners must maintain strict compliance to avoid liability. Tenants who understand these provisions can better protect their rights and potentially recover substantial damages for violations.
Whether you’re managing a dispute over a security deposit or want to ensure compliance, consulting with an eviction attorney in Orange County early in the process can help you avoid expensive mistakes.
