Under California security deposit law (Civil Code 1950.5), a landlord can take no more than one month's rent as a deposit for deposits taken since July 1, 2024, or two months for a small landlord with no more than two properties and four units. Deductions are limited to unpaid rent, damage beyond wear and tear and cleaning back to move-in condition, backed by photos, and the balance goes back with an itemized statement within 21 days. When you sell, you either transfer the deposit to the buyer with written notice to the tenant or return it.
You own a rental house in or around Sacramento with a tenant's deposit on hand, you're thinking about selling, and you need to know what the law allows you to hold, deduct and hand over.
California security deposit law at a glance
| Statute | Civil Code 1950.5 |
|---|---|
| Cap (from July 1, 2024) | One month's rent, plus first month's rent |
| Small-landlord exception | Two months: natural person or LLC of natural persons, max 2 properties and 4 units |
| Photos | Move-out before and after repairs from April 1, 2025; move-in for tenancies from July 1, 2025 |
| Return deadline | 21 calendar days after move-out, with an itemized statement |
| Receipts required | For repair and cleaning deductions over $125 |
| Bad-faith penalty | Up to twice the deposit, plus actual damages |
| On sale | Transfer to buyer with notice, or return to tenant (1950.5(i)-(k)) |
How much security deposit California law allows
Civil Code 1950.5 governs every residential deposit in California. AB 12 rewrote its limit from July 1, 2024: before that, owners could take two months' rent unfurnished and three furnished. This page is general information for owners, not legal advice; a landlord-tenant attorney can review your lease and your move-out statement.
One month's rent: the AB 12 security deposit cap
A landlord can't demand or receive security of more than one month's rent, on top of the first month's rent paid at move-in, furnished or not (1950.5(c)(1)). At Zillow's typical Sacramento asking rent of $2,045 a month (September 2026), that's a $2,045 deposit.
The small-landlord security deposit exception
You can take up to two months' rent if you're a natural person, or an LLC whose members are all natural persons, and you own no more than two residential rental properties with no more than four units between them (1950.5(c)(5)). A settlor or beneficiary of a family trust counts as a natural person. Two Sacramento rental houses qualify; a third doesn't.
Service member deposits under AB 12
The two-month exception never applies to a service member tenant, and you can't refuse to rent to one because of it. Since April 1, 2025, if you charge a service member more than your standard deposit because of credit or rental history, you must explain the higher amount in writing by the lease signing and return the extra after six months if rent is current (1950.5(c)(4)).
Security deposits taken before July 1, 2024
The cap doesn't apply to security collected or demanded before July 1, 2024 (1950.5(c)(6)). A long-term Sacramento tenant may still have a larger deposit on file, and that is the figure your buyer inherits.
What counts toward a California security deposit
The cap covers any payment, fee, deposit or charge taken at the start of a tenancy to cover processing a new tenant or as advance rent, whatever you call it (1950.5(b)). The Attorney General names pet deposits and cleaning fees as examples.
Last month's rent and pet deposits count toward the deposit
Collecting "last month's rent" at move-in is advance rent, so it counts. So does a pet deposit or a move-in fee. Add them all up and compare the total with one month's rent.
Payments outside the security deposit cap
The first month's rent, an application screening fee under Civil Code 1950.6 (capped at $30 in 1997 dollars, adjusted by CPI, and only for actual costs), and an advance of at least six months' rent on a lease of six months or more sit outside the cap. Can you ask for more than a deposit? Only through those routes.
No "nonrefundable" security deposit
A lease can't call any part of the security nonrefundable (1950.5(n)). A nonrefundable cleaning fee is still security and is refunded under the same rules.
Security deposit deductions California allows
You can keep only what's reasonably necessary for four purposes (1950.5(b), (e)), and you carry the burden of proving each amount was reasonable if it's challenged.
Unpaid rent from the security deposit
Rent the tenant owes when they leave can come out of the deposit.
Deposit deductions for damage beyond wear and tear
Damage caused by the tenant or their guests is deductible. Ordinary wear and tear never is, during this tenancy or added up over several, and neither is any defect that existed before the tenant moved in. Since AB 2801, charges for materials and labor are limited to restoring the home to its condition at the start of the tenancy.
Can a landlord deduct cleaning from a California security deposit?
Yes, but only to return the home to the level of cleanliness it was in when the tenant moved in (1950.5(b)(3)). You can't charge for professional carpet cleaning or other professional cleaning unless it's reasonably necessary to get back to move-in condition, excluding wear and tear (1950.5(e)(2)(C)).
Furnishings the lease lets the deposit cover
If the rental agreement says so, the deposit can pay to restore, replace or return personal property or fixtures, again excluding wear and tear.
AB 2801 security deposit photos
AB 2801 added a photo record to every deduction. Without the photos, a deduction is hard to defend.
Move-in deposit photos for tenancies from July 1, 2025
For any tenancy that begins on or after July 1, 2025, you must photograph the unit immediately before, or at the start of, the tenancy (1950.5(g)(1)).
Move-out deposit photos before and after repairs
Since April 1, 2025, you must photograph the unit within a reasonable time after you get possession back, before any repair or cleaning you'll charge for, and again after the work is done (1950.5(g)(2)). The photos go to the tenant with the itemized statement, by mail, email, flash drive or an online link.
Returning a California security deposit within 21 days
The security deposit pre-move-out inspection
Once either side gives notice to end the tenancy, you must tell the tenant in writing that they can ask for an initial inspection and be present (1950.5(f)). It happens no earlier than two weeks before move-out, with 48 hours' written notice unless you both waive it. You then leave a list of proposed deductions so the tenant can fix them; items you could have listed and didn't generally can't be deducted later. The step doesn't apply after a 3-day notice under CCP 1161(2), (3) or (4).
The 21-day itemized security deposit statement
No later than 21 calendar days after the tenant moves out, send an itemized statement of what you kept and why, and return the rest (1950.5(h)).
Receipts for security deposit deductions over $125
With the statement, include invoices or receipts for repairs and cleaning, or your own time and hourly rate if you did the work. If repairs and cleaning together total $125 or less, you can skip the documents unless the tenant asks within 14 days.
Deposit estimates and the 14-day follow-up
If a repair can't reasonably be finished within 21 days, deduct a good-faith estimate and send the receipts within 14 days of finishing.
AB 414: how the security deposit is returned from 2026
AB 414, signed October 6, 2025, changed how the money goes back. If the tenant paid the deposit or rent electronically, you return the deposit electronically to an account they designate, unless you've agreed another method in writing, and you must tell them of that right. With several adult tenants and no written agreement, the refund is a check payable to all of them.
Security deposit penalties: what happens after 21 days in California
Losing the right to keep any of the deposit
If you fail in bad faith to follow the 21-day rules, you lose the right to keep any amount at all (1950.5(h)(7)).
Twice the security deposit for bad faith
A court can award the tenant statutory damages of up to twice the deposit, on top of actual damages, for a bad-faith claim or retention (1950.5(m)). It can do so even if the tenant didn't ask for it.
Security deposit disputes in small claims court
The tenant can sue in small claims, which the courts' self-help guide says covers claims up to $12,500. In small claims, your photos, receipts and dated statement are your case.
What happens to the security deposit when you sell a Sacramento rental
A sale ends your interest in the house, and 1950.5(i) gives you two ways to close out the deposit within a reasonable time. Escrow usually handles it as a credit to the buyer; the details of selling with a tenant in place are on selling a Sacramento house with tenants.
Transfer the security deposit to the buyer
Transfer what's left after lawful deductions to the buyer, then notify the tenant by personal delivery or first-class mail of the transfer, any claims against the deposit, the amount, and the buyer's names, addresses and phone numbers.
Return the deposit to the tenant with an accounting
Or return the balance to the tenant with the same itemized accounting as a move-out. That fits when the tenant is leaving at closing.
The written deposit statement to your buyer
Before a voluntary sale, give the buyer a written statement of the deposit remaining, any deductions and which option you chose (1950.5(j)).
Buyer liability for an untransferred security deposit
If you skip both options, the buyer becomes jointly liable with you for the deposit (1950.5(k)), and can't demand a replacement deposit from the tenant until it's sorted out. That's why an investor buyer will ask for the lease and the deposit figure early.
California security deposit checklist before you list
- Find the deposit. Lease, ledger and bank record: amount and date collected.
- Check it against the cap. Taken on or after July 1, 2024 and over one month's rent? Ask an attorney before closing, unless the small-landlord exception fits.
- Pull your move-in photos. For a tenancy from July 1, 2025 they're required; for older ones, any record of condition helps.
- Decide transfer or return. Tenant staying: transfer and notify. Tenant leaving: inspect, photograph, and send the 21-day statement.
- Put it in the escrow instructions. The buyer's credit should match your written statement.
If the tenant is behind on rent or won't leave, the eviction process in California explains what comes next, and the notice to vacate rules cover ending a tenancy. Justin can price the house with the tenant in place and vacant; start with selling your Sacramento rental.
California security deposit law: owner questions
What happens if a landlord doesn't return a security deposit in 21 days in California?
The tenant can demand it in writing and then sue, often in small claims. If the landlord failed to follow the 21-day rules in bad faith, they lose the right to keep any of the deposit, and a court can add statutory damages of up to twice the deposit on top of actual damages. The landlord must prove every deduction was reasonable.
What are the changes in California's security deposit law for 2026?
AB 414, in force from 2026, changes how deposits are returned. If the tenant paid the deposit or rent electronically, the refund goes back electronically to an account they choose unless both sides agree otherwise in writing. With several adult tenants and no written agreement, the refund is a check payable to all of them. The one-month cap and the photo rules from 2024 and 2025 still apply.
Can a landlord deduct a deposit for cleaning in California?
Yes, but only enough to return the home to the cleanliness it had when the tenant moved in. The landlord can't charge for professional carpet cleaning or other professional cleaning unless it's reasonably necessary to reach move-in condition, and ordinary wear and tear is never deductible. Deductions over $125 need receipts and before-and-after photos.
Can a landlord ask for more than a security deposit in California?
Not under another name. Any payment, fee or charge taken at the start of a tenancy, including last month's rent, a pet deposit or a cleaning fee, counts toward the one-month limit. The first month's rent, an application screening fee limited to actual costs, and at least six months' advance rent on a lease of six months or more are outside it.
What is the maximum security deposit in California?
One month's rent, on top of the first month's rent, for deposits taken from July 1, 2024 (Civil Code 1950.5 as amended by AB 12). An owner who is a natural person, or an LLC of natural persons, with no more than two rental properties and four units in total can take up to two months, except from a service member tenant.
Do landlords have to take photos for a security deposit in California?
Yes. Since April 1, 2025, landlords must photograph the unit after the tenant moves out, before any repair or cleaning they'll charge for, and again afterward. For tenancies starting on or after July 1, 2025, they must also photograph it at move-in. The photos go to the tenant with the itemized statement.
What happens to the security deposit when a rental is sold?
The seller either transfers the remaining deposit to the buyer and notifies the tenant in writing with the amount, any claims and the buyer's contact details, or returns it to the tenant with an itemized accounting. Before closing, the seller gives the buyer a written statement of the deposit. If neither happens, the buyer is jointly liable with the seller for it.
Sources
- California Civil Code 1950.5 (security deposits)
- California Civil Code 1950.6 (application screening fee)
- AB 12 (2023), chaptered text: one-month deposit limit
- AB 2801 (2024), chaptered text: deductions and photographs
- AB 414 (2025), chaptered text: return of security
- California Courts self-help: security deposits
- California Attorney General: tenants' rights
- CSULB Legal Resource Center: new California laws effective 2026
- Zillow Research: Observed Rent Index (September 2026)
Reviewed by Justin Vierra
Justin reviewed this page for accuracy on October 28, 2026. Figures come from the sources listed above. Our research process.
Justin Vierra is a Sacramento Realtor® with GUIDE Real Estate and Principal of the Vierra Group who sells rental homes for their owners, with tenants in place or vacant. He spent six years in Midtown property management before he began selling homes in 2010.
- Since 2010Licensed in California, DRE #01880488
- 6 yearsManaging Midtown rental property before he sold homes
- 447Vierra Group team sales on Zillow, 26 in the past 12 months
- 440+Career sales, as reported by Justin
- Six years in property management: Midtown Sacramento: older buildings, multifamily property, maintenance and tenants
- Principal, Vierra Group: His team at GUIDE Real Estate, 3001 I Street, Sacramento
- Sacramento Real Producers: Top 250 agent for 2025, as reported by Justin
Realtor®, DRE #01880488. Vierra Group, GUIDE Real Estate, 3001 I St, Suite 200, Sacramento, CA 95816. General information, not legal, tax or financial advice.
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