Security deposits in California are regulated by California Civil Code § 1950.5. Certain municipalities may have local laws that supplement state regulations. To ensure full compliance, verify the regulations applicable in your area.

California: KEY POINTS AT A GLANCE

Deposit Cap: 1x Monthly Rent (with exceptions)

Holding Requirements: No

Interest Required: No 

Return Window: 21 days

COLLECTION & HOLDING REQUIREMENTS

Deposit Cap: Security deposits must generally be limited to one month’s rent. However, if a landlord/property manager (1) is a natural person or a limited liability company in which all members are natural persons and (2) owns no more than two residential rental properties that collectively have no more than four dwelling units offered for rent, the security deposit may be limited to two month’s rent. A separate pet deposit cannot be charged on top of the maximum security deposit.

Holding Requirements: California state law does not currently specify where landlords/property managers must hold security deposits. 

Information Provided to Tenant: There is currently no specific requirement for landlords/property managers to provide tenants with information about where their security deposits are held.

Interest on Deposits: California state law does not currently require landlords/property managers to pay tenants interest on security deposits. However, certain local jurisdictions may require landlords/property managers to pay interest on security deposits to tenants.

RETURN

Timeline: Security deposits must be returned within 21 days of the tenant vacating the property.

Documentation of Deductions: If any portion of the security deposit is withheld, the landlord/property manager must provide an itemized statement within 21 days of the tenant vacating the property indicating the basis for and amount of any deductions to the security deposit. This itemized statement must include documentation showing the actual cost incurred by the landlord for any repairs, cleanings, missed rent, etc. The landlord/property manager must also take and provide tenants with photographs of the rental unit before and after any repairs or cleanings have been completed. If the deductions to the security deposit equal $125 or less, the landlord/property manager is not required to include supporting documents with the itemized statement. 

For tenancies that begin on or after July 1, 2025, the landlord/property manager must also photograph the unit immediately before, or at the inception of, the tenancy and provide these photographs to the tenant.

Permissible Deductions: Landlords/property managers may deduct the following from a security deposit:

• Unpaid rent
• Damage caused by the tenant or the tenant’s guests beyond ordinary wear and tear
• Cleaning that is reasonably necessary to restore the rental unit to move-in condition
• Replacing or restoring property that was provided by the landlord/property manager and damaged during the tenancy

Landlords/property managers cannot deduct the cost of carpet cleaning or other cleaning services unless it is reasonably necessary to restore the rental unit to its move-in condition.

‍Penalties: Failure to return the security deposit or provide an itemized statement of deductions to the tenant may result in the landlord/property manager being liable for the amount withheld and damages of up to twice the amount of the original security deposit.

SALE OF THE RENTAL PROPERTY

If the rental property is sold, the landlord/property manager must do one of the following concerning the tenants’ security deposits:

• The landlord/property manager may transfer the remaining portion of the security deposit to their successor in interest after making any lawful deductions. The landlord/property manager shall notify the tenant of the transfer, any deductions made against their security deposit, the amount of the security deposit held by the successor in interest, and the name(s) of the successor(s) in interest, their address(es), and their telephone number(s). If the notice to the tenant is made by personal delivery, the tenant shall acknowledge receipt of the notice and sign their name on the landlord/property manager's copy of the notice; or 

• The landlord/property manager may, after making any lawful deductions, return the remaining portion of the security deposit to the tenant with an itemized list.