California has rewritten its security deposit law three times in three years. AB 12 (effective July 1, 2024) cut the cap most landlords can charge from two or three months' rent to one month. AB 2801 (phasing in through 2025) made photographs mandatory — of the unit at move-in, at move-out, and after repairs — before you can deduct anything. And AB 414 (effective January 1, 2026) changed how the refund itself must be delivered, down to who the check is payable to.
All of it lives in Cal. Civ. Code § 1950.5, and a California residential lease agreement or move-out process built on the pre-2024 rules now violates it in several places at once. Here's the current machine, piece by piece.
The cap: one month's rent, furnished or not
Since AB 12, § 1950.5(c)(1) says a landlord "shall not demand or receive security … in excess of an amount equal to one month's rent." The old furnished-versus-unfurnished distinction (two months for unfurnished, three for furnished) is gone. "Security" is read broadly — last month's rent collected up front, pet deposits, and key deposits all count against the same one-month ceiling.
The small-landlord exception. Under § 1950.5(c)(5)(A), you may still collect up to two months' rent if both are true:
- You are a natural person (or an LLC in which every member is a natural person), and
- You own no more than two residential rental properties that collectively include no more than four dwelling units offered for rent.
Even then, § 1950.5(c)(5)(B) removes the exception when the prospective tenant is a service member — you're back to one month, and you can't refuse to rent to them because of it.
The photo rules: AB 2801's paper trail
This is the change that catches landlords in 2026. Deductions now require a photographic record at three points:
- Move-in (§ 1950.5(g)(1)): for tenancies beginning on or after July 1, 2025, you must photograph the unit immediately before, or at the inception of, the tenancy.
- Move-out (§ 1950.5(g)(2)): beginning April 1, 2025, you must photograph the unit within a reasonable time after the tenant returns possession.
- After the work (§ 1950.5(g)(2)): photograph the unit again once the repairs or cleaning you're deducting for are completed.
Under § 1950.5(h)(2)(D) you then provide those photographs to the tenant along with a written explanation of the cost of the work — by mail, email, flash drive, or a link where the tenant can view them online. No before-and-after record, no defensible deduction: the photos are what separate actual damage from ordinary wear and tear when a judge looks at the file.
The pre-move-out inspection
California's older gotcha still applies. Under § 1950.5(f), once either side gives notice ending the tenancy, you must tell the tenant they have the right to an initial inspection — held, at their request, no earlier than two weeks before move-out, on 48 hours' written notice. You give the tenant an itemized list of what you'd currently deduct, and they get the chance to fix it before they leave. Skip the notice and you've handed the tenant an argument against every deduction on your list.
The 21-day return and the receipt rules
§ 1950.5(h) gives you 21 calendar days after the tenant vacates to deliver a refund and an itemized statement — by personal delivery, first-class mail, or email if the tenant has agreed in writing. Unlike Texas's 30-day rule, the clock doesn't wait for a forwarding address.
Attach documentation: receipts or invoices for each deduction are required unless repairs and cleaning together total $125 or less. If a repair genuinely can't be finished inside the window, § 1950.5(h)(3) lets you deduct a good-faith estimate, then follow up with the actual receipts within 14 days of completing the work.
And § 1950.5(e)(2) draws the substantive line: nothing may be charged for ordinary wear and tear or for conditions that existed before the tenancy — which is exactly what your move-in photos will prove, one way or the other.
New for 2026: how the refund itself must move
AB 414 modernized the mechanics, effective January 1, 2026:
- If the tenant paid the deposit or rent electronically, the refund must be returned electronically too, unless a written agreement designates another method.
- With multiple adults on the lease, the refund is one payment payable to all adult tenants — splitting it, or sending it to one roommate, requires every tenant's written agreement.
- The itemized statement may be emailed only with the tenant's written consent; otherwise it's personal delivery or first-class mail.
If your move-out checklist still ends with "mail a check to whoever left a forwarding address," it's now out of date.
The penalty: up to twice the deposit
Bad-faith retention — keeping money you knew you weren't entitled to, or blowing the 21-day deadline without excuse — exposes you under § 1950.5(m) to statutory damages of up to twice the deposit, on top of actual damages. California is gentler than Massachusetts's treble-damages regime, but on a $3,000 Los Angeles deposit the downside is still $9,000 before you've paid a lawyer. You can see how all twenty states we cover compare on our security deposit laws by state page.
Common mistakes
Charging the old two-month deposit. AB 12 has been in force since July 2024; a "standard" pre-2024 CA lease template overcharges by a month the moment it's signed.
Claiming the small-landlord exception through an entity. A corporation or an LLC with any non-natural-person member doesn't qualify — and against a service member, nobody does.
Deducting without photographs. For any tenancy touched by the 2025 effective dates, no move-out and post-repair photos means your itemized statement arrives unsupported.
Skipping the initial-inspection notice. The § 1950.5(f) offer isn't optional, and it must come with the chance to cure.
Refunding one roommate by paper check. Post-AB 414, electronic-in means electronic-out, and multi-tenant refunds are payable to everyone absent written agreement.
Build a compliant California lease — $29 one-time, generated in minutes, with the AB 12 deposit cap, pre-move-out inspection clause, and required CA disclosures built in. Renting under AB 1482's rent cap too? See our AB 1482 explainer, or start with the security deposit glossary entry.
Statutory references
- Cal. Civ. Code § 1950.5(c) — one-month cap (AB 12, eff. July 1, 2024); two-month small-landlord exception at (c)(5)(A); service-member carve-out at (c)(5)(B). Official text
- Cal. Civ. Code § 1950.5(f) — pre-move-out initial inspection: tenant notice, 48-hour written notice, opportunity to cure.
- Cal. Civ. Code § 1950.5(g) — AB 2801 photograph requirements: move-in (tenancies from July 1, 2025), move-out and post-repair (from April 1, 2025).
- Cal. Civ. Code § 1950.5(h) — 21-day itemized statement + refund; receipts above $125; good-faith estimate with 14-day true-up; AB 414 delivery and electronic-refund mechanics (eff. Jan. 1, 2026).
- Cal. Civ. Code § 1950.5(e)(2) — no deductions for ordinary wear and tear or preexisting conditions.
- Cal. Civ. Code § 1950.5(m) — bad-faith retention: statutory damages up to 2× the deposit plus actual damages.