Key Takeaways
California security deposit laws are strict and tenant friendly. Deposit limits, walk-through inspections, refund timelines, and documentation requirements must be followed precisely, or landlords risk penalties that can exceed the deposit amount.
Only specific deductions are allowed, and normal wear and tear cannot be charged. Security deposits may be used for unpaid rent, cleaning, and damage beyond normal wear and tear, but landlords must document conditions carefully and provide itemized statements within the required deadlines.
Deadlines and proper procedures protect your investment. From the required pre-move-out inspection to the 21-day refund rule and ownership transfer requirements, staying organized and compliant helps prevent disputes, legal issues, and financial losses.
Understanding California security deposit law is essential to managing a rental property, and at 33 Property Management, we know even experienced landlords can make costly mistakes. When a security deposit is handled incorrectly, landlords may face penalties that exceed the deposit amount.
Properly managing a deposit helps protect against unpaid rent, damage beyond normal wear and tear, and disputes at move out while providing financial security during tenant turnover. Because California’s laws are detailed and tenant friendly, accuracy and strict timelines are critical.
To help property owners stay compliant and reduce risk, 33 Property Management created this guide to explain California security deposit law in clear, practical terms.
Learn More About Our Free Rental Analysis– Discover Your Property’s True Rental Value
A Landlord’s Guide to California Security Deposit Law
California Security Deposit Limit
Most states limit how much a landlord can charge a renter for a security deposit. In California, the limit depends on whether the rental unit is furnished.
For unfurnished residential units, the maximum security deposit is equal to two months’ rent. For furnished units, the maximum is three months’ rent. This total includes all deposits, whether they are labeled as security, cleaning, or pet deposits. California does not allow landlords to exceed these limits by splitting deposits into different categories.
For example, if monthly rent is $2,000 for an unfurnished apartment, the total deposit cannot exceed $4,000. Charging more than the legal limit can expose a landlord to tenant claims and penalties.
Because California landlord-tenant laws are among the most detailed and tenant-protective in the country, landlords must follow every security deposit requirement carefully to avoid disputes, fines, and legal liability.
Nonrefundable Fees
California does not allow nonrefundable security deposits. Any money collected as a deposit must be refundable, minus lawful deductions. While landlords may charge certain nonrefundable fees, such as application screening fees within legal limits, anything labeled or used as a security deposit must follow refund rules.
Calling a deposit nonrefundable does not make it legal. Courts look at how the money is used, not what it is called. If it functions as a deposit, it must be refundable under California law.
Storing a Tenant’s Deposit in California
California does not require landlords to place security deposits in a separate bank account, nor does it require interest to be paid on deposits unless a local city ordinance says otherwise. Most areas of the state do not require interest payments, but some cities do, so landlords should check local rules.
While the law is flexible on storage, landlords are still responsible for safeguarding the funds. Using deposit money for personal or business expenses before the tenant moves out is risky and can lead to disputes or legal claims.
Written Notice After Security Deposit Receipt
California landlords are not required by state law to provide a written receipt specifically for the security deposit, unless the tenant pays in cash. However, best practice is to clearly document the deposit amount in the lease agreement and keep accurate records.
If a tenant requests a receipt, providing one helps maintain transparency and reduces confusion later, especially during move-out.
Learn More About Our Pricing– Fair & Transparent Pricing With No Hidden Fees
Reasons to Withhold a Tenant’s Security Deposit in California
Under certain conditions, landlords can keep all or part of a tenant’s security deposit. In California, common reasons include:
Unpaid rent.
Repairing damage beyond normal wear and tear.
Cleaning the unit to return it to move-in condition.
Replacing or restoring landlord-owned personal property.
California law is very clear that landlords cannot use the deposit for normal wear and tear. Minor carpet wear, faded paint, or loose door handles from ordinary use cannot be charged to the tenant.
In accordance with California renter rights, landlords also cannot deduct for conditions that existed before the tenant moved in. This is why good documentation at move-in is essential.
A Walk-Through Inspection
A walk-through inspection is required under California landlord-tenant law. This inspection gives tenants a chance to fix issues before move-out and avoid deductions.
Landlords must give the tenant at least 48 hours’ written notice before conducting the inspection. The inspection must take place no earlier than two weeks before the end of the tenancy, unless the tenant requests an earlier date.
After the inspection, landlords must provide an itemized list of potential deductions and allow the tenant time to correct them. Skipping this step can limit what deductions a landlord may legally claim later.
Security Deposit Refund in California
Once the tenant vacates the unit, California landlords have 21 calendar days to return all or part of the security deposit. This deadline is strict.
If there are no deductions, the full deposit must be returned within 21 days. If there are deductions, the landlord must provide an itemized list explaining each charge. Copies of receipts must be included if the work is completed. If repairs are not yet finished, a good-faith estimate may be used, followed by final documentation later.
Failing to meet the 21-day deadline can result in the landlord being ordered to pay the deposit back plus additional penalties.
Get A Free Consultation – Schedule Your Complimentary Property Consultation
Change in Property Ownership
When a rental property changes ownership, the outgoing landlord has two options. First, the outgoing landlord may return the security deposit, minus any lawful deductions, directly to the tenant. The outgoing landlord must also notify the incoming owner that the deposit has been returned.
Second, the outgoing landlord may transfer the deposit to the new owner. In this case, the outgoing landlord must notify the tenant in writing. The notice must include the name, address, and contact information of the new owner and confirm that the deposit has been transferred.
The new owner then becomes responsible for the deposit under California law.
Learn More About Our Services – Explore Our Full Property Management Services
Conclusion
California security deposit law places clear responsibilities on landlords. From deposit limits and walk-through inspections to refund deadlines and ownership changes, every step matters. Staying compliant protects your rental income, reduces disputes, and keeps your business running smoothly.
If you have specific questions about your situation, hire the services of a qualified California attorney. Alternatively, you can seek help from a knowledgeable property management company.
33 Property Management works with California landlords every day to ensure deposits are handled correctly, deadlines are met, and documentation is solid. If you want fewer headaches and better protection for your investment, reach out to 33 Property Management today and let professionals handle the details.
Contact Us – Get in Touch with a Property Management Expert
Disclaimer: This blog should not be used as a substitute for legal advice from a licensed attorney in your state. Laws frequently change, and this post might not be updated at the time of your reading. Please contact us for any questions you have in regards to this content or any other aspect of your property management needs.
