What changed, who's exempt, and what California landlords need to do at every lease renewal in 2026.
California security deposits are capped at one month's rent as of July 1, 2024 (AB 12). Exception: a landlord who personally owns ≤2 properties / ≤4 total rental units can charge up to two months' rent — but never to a service member tenant.
Assembly Bill 12, signed October 11, 2023 by Governor Newsom and effective July 1, 2024, amended California Civil Code §1950.5 to cap residential security deposits at one month's rent. The prior law allowed up to two months' rent for unfurnished and three months' rent for furnished units. AB 12 collapsed both into a single one-month cap, with one narrow exception for small landlords.
The change was the largest single update to California security deposit law in decades. It applies to virtually all residential rentals — single-family homes, condos, apartments, duplexes — and is enforced through the existing §1950.5 private-action framework (tenant can sue, courts can award damages).
AB 12 contains one narrow exception that lets some small landlords still charge up to two months' rent. To qualify, all four conditions must be met:
The cap is based on the monthly rent stated in the lease — not market rent, not effective rent after concessions. If rent is $3,000/mo, the maximum deposit is $3,000 (or $6,000 under the small-landlord exception). The cap applies regardless of whether the unit is furnished or unfurnished — that distinction was eliminated by AB 12.
Pet deposits, last month's rent, application fees, and other charges are separate from the security deposit and are governed by their own rules. AB 12's one-month cap is specifically the "security deposit" defined in §1950.5(b).
| Scenario | What AB 12 requires |
|---|---|
| Lease signed before July 1, 2024 (deposit collected at higher amount) | No refund required. Existing deposit can be held under the prior contract terms. |
| Lease renewal on or after July 1, 2024 | Any new deposit collection must comply with the one-month cap. Cannot collect "supplemental" deposit above one month. |
| New lease signed July 1, 2024 or later | One month's rent maximum (or two months under the small-landlord exception). |
| Tenant moves out, you re-rent the unit | New deposit collected from new tenant must comply with AB 12. |
| Tenant requests refund of "excess" old deposit | Not legally required to refund deposits that were lawful when collected. But check for goodwill if the over-cap amount is significant. |
AB 12 did not change the §1950.5 rules around what landlords can deduct from a security deposit at move-out, the 21-day return deadline, or the itemized statement requirements. Those continue to apply exactly as before. See our complete §1950.5 security deposit rules guide for the full move-out playbook.
The §1950.5 enforcement framework applies. A tenant whose landlord collected an unlawful deposit (above the AB 12 cap) can:
The exposure is meaningful. On a $3,500/mo rental, charging two months' deposit (instead of one) creates $3,500 of excess plus potential $7,000 in statutory damages — for a total exposure of $10,500 per unit before legal fees. Don't try to thread the needle on this one.
Orange County rental market data suggests AB 12 is most disruptive in coastal markets where deposits historically ran 2-3x rent. A Newport Beach SFR renting for $4,620/mo previously had deposits of $9,200-$13,860; AB 12 caps that at $4,620.
Practical implications for OC owners:
One month's rent, period. Exception: a natural person owning ≤2 properties / ≤4 units total may charge up to two months — but never to a service member.
A landlord who is a natural person (not an LLC), owns no more than 2 properties, and has no more than 4 total rental units may charge up to two months' rent. Service members are always capped at one month regardless.
No. Deposits collected under leases signed before July 1, 2024 do not need to be refunded. New deposits at lease renewal or with new tenants must comply with the cap.
Refund the excess immediately. Tenants can sue for the unlawful amount plus statutory damages up to 2x the deposit if retention was in bad faith. Document the corrected ledger.
Yes. Any deposit-style payment held against future damage counts toward the one-month cap. To collect more for pets, use monthly pet rent (not a pet deposit) — pet rent is not part of the §1950.5 deposit calculation.
Free review of your current deposit ledger and lease language against AB 12 + §1950.5.
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