California Security Deposit Rules 2026, One Month Cap + Small Owner Carve-Out
California capped residential security deposits at one month's rent under Assembly Bill 12, effective July 1, 2024. A narrow carve-out preserves the old two-month cap for small natural-person landlords. In 2026, the carve-out lives at Cal. Civ. Code Section 1950.5(c)(5)(A), not (c)(4)(A). Assembly Bill 414 inserted a new paragraph (4) ahead of the carve-out, renumbering it. Most template sites still cite the old subsection.
The one-month cap under AB 12
AB 12 amended Cal. Civ. Code 1950.5(c) to cap the total security deposit at one month's rent for most residential tenancies. That includes:
- Standard cleaning deposits.
- Pet deposits.
- Key deposits.
- Any other refundable deposit called a deposit.
The cap is on the total, not per-item. If rent is $2,500/month, the landlord cannot collect more than $2,500 total in deposits, even if the tenant has a pet and an additional key.
Non-refundable fees (cleaning fees marked non-refundable, application fees, late fees) are not counted toward the deposit cap but are subject to their own limits elsewhere in the code.
Small owner carve-out at 1950.5(c)(5)(A)
A landlord who is a natural person (not a corporation) and who owns at most two residential properties totaling no more than four dwelling units may still collect a two-month deposit, as long as the tenant is not a member of the armed services.
The carve-out statute sits at Cal. Civ. Code 1950.5(c)(5)(A) in 2026.
AB 414 renumbering effective January 2026
AB 414 (Chapter, operative January 1, 2026) inserted a new paragraph (4) in subsection (c), pushing the pre-existing carve-out from (c)(4)(A) to (c)(5)(A). AB 414 also extended the carve-out to include LLCs whose members are all natural persons, not just individual humans.
The practical effect, template sites that still cite 1950.5(c)(5)(A) are citing a subsection that, as of January 2026, no longer contains the carve-out.
21-day return deadline
Cal. Civ. Code 1950.5(g) requires the landlord to return the deposit within 21 days of the tenant vacating, with an itemized statement if any amount is withheld. If deductions exceed $125, receipts or invoices have to be attached.
Missing the 21-day deadline can trigger punitive damages of up to twice the withheld amount if the court finds bad faith.
Allowed deductions
California allows deductions for:
- Unpaid rent.
- Cleaning beyond normal wear and tear.
- Damage beyond normal wear and tear.
- Costs to comply with the lease (e.g. carpet cleaning if required).
NOT allowed:
- Normal wear (scuffs, small nail holes, minor paint fading).
- Repainting because the paint is old.
- Pre-existing damage (unless documented at move-in).
- Upgrades.
Where to get a compliant lease
LeaseKit's California residential lease template has the one-month cap built in, with the small-owner carve-out flag that cites 1950.5(c)(5)(A) correctly. $29 one-time, no account. A free California move-in/move-out checklist is also available.
This post is informational. California deposit rules are strict. For contested deposit cases, consult a California-licensed attorney.