California Security Deposit Limits: Understanding AB12

By Elyssa Matson Jones

As of July 1, 2024, California's AB12 has introduced significant changes to security deposit limits, impacting landlords and tenants alike. This guide is designed for property owners in California seeking to understand the new rules, exemptions, and best practices to protect their investments while staying compliant.

California Security Deposit Limits – Effective July 1, 2024

Beginning July 1, 2024, California’s AB 12 limits the maximum security deposit to one month’s rent for both furnished and unfurnished units, unless the owner qualifies for a specific exemption.

Previously, security deposits could be up to two months’ rent for unfurnished units and three months’ rent for furnished units.

Do I Need to Return Deposits Exceeding One Month?

According to Richard Beckman, Esq., on behalf of the Apartment Owner’s Association, “Nothing in the Act indicates any impact on existing deposits or deposits taken prior to the July 1, 2024 effective date of the Act.”²

Now What?

For many property owners, the one-month limit may make it challenging to cover significant damages or unpaid rent. This makes thorough leasing and screening even more important:

• Use comprehensive third-party screening
• Call employers through publicly listed numbers rather than tenant-provided contacts
• Verify all documentation

These steps help reduce the potential for damages later on.

Read more on EJ Properties' Leasing and Screening Process

Pet Deposits

Since the total security deposit is limited to one month’s rent, additional deposit items that would move the deposit beyond a one month equivalent, such as a pet deposit, cannot be added unless the owner is exempt. Instead, a monthly non-refundable pet fee may be agreed upon and should be retained separately to cover any potential pet-related damages.

Note: Emotional Support Animals (ESA) and Service Animals cannot be charged extra. These are considered reasonable accommodations under the Americans with Disabilities Act (ADA) and are not considered pets.

Learn more about ESAs

Exemptions from the One-Month Limit

• Small Landlord Exception: If the landlord is a natural person (or an LLC whose members are all natural persons) and owns no more than 2 residential rental properties totaling 4 or fewer units, they may charge up to 2 months’ rent as a security deposit.
• Service Member Exception: Even if a landlord qualifies for the 2-month exemption, active-duty service members are limited to a 1-month security deposit.

Sources

California Assembly Bill 12

Apartment Owners Association Legal Q&A

EJ Properties Leasing and Screening Process

ESA General Information