California’s Security Deposit Law in 2026: What San Diego Landlords Must Know
If you own a San Diego rental, the most important number to memorize is this: your security deposit is now capped at one month’s rent. California’s AB 12 changed the rules on July 1, 2024, and the landlords I work with who still collect the old two-month deposit are quietly exposing themselves to real penalties.
I’m Amara Berg, and I help San Diego owners run their rentals like the businesses they are. Here’s the plain-English version of what changed and how to stay clean.
Quick answer for San Diego landlords
- Deposit cap: one month’s rent, furnished or unfurnished (since July 1, 2024).
- Return window: deposit or itemized statement within 21 calendar days of move-out.
- Penalty for bad faith: a court can award up to two times the deposit on top of what’s owed.
Who this is for
This is for San Diego rental owners — whether you have one condo in Pacific Beach or a small portfolio across the county — who want to hand back deposits without a dispute, a bad review, or a small-claims letter. Deposits are where good landlord-tenant relationships quietly go to die. They don’t have to.
What AB 12 actually changed
Before AB 12, California let you collect up to two months’ rent on an unfurnished unit and three on a furnished one. Since July 1, 2024, the cap is one month’s rent for both. There’s one narrow exception, and it’s easy to get wrong.
| Deposit rules | Before AB 12 | Since July 1, 2024 |
|---|---|---|
| Unfurnished unit | Up to 2 months’ rent | 1 month’s rent |
| Furnished unit | Up to 3 months’ rent | 1 month’s rent |
| Small-landlord exception | — | Up to 2 months if you’re a natural person (or an LLC of natural persons) owning no more than 2 rental properties totaling no more than 4 units — and not for a service-member tenant |
Read that exception carefully. Even if you qualify as a small landlord, you cannot charge a service member more than one month’s deposit. When in doubt, collect one month and move on — it’s the safe default.
The deposit isn’t your money — it’s the tenant’s money you’re holding. Treat it that way and the 21-day clock stops being scary.
The 21-day clock — and what a bad move costs
Under California Civil Code 1950.5, you have 21 calendar days after the tenant moves out to return the deposit or send an itemized statement of deductions with receipts for anything over $125. Miss the window or withhold in bad faith, and a court can hit you for up to twice the deposit in statutory damages. Here’s what that looks like in dollars on a typical San Diego rental:
| Scenario | Amount |
|---|---|
| Monthly rent (deposit = 1 month) | $3,200 |
| Deposit you must return | $3,200 |
| Bad-faith statutory damages (up to 2x) | up to $6,400 |
| Potential total exposure | up to $9,600 |
Four habits that keep you compliant
- Document move-in condition. Photos and a signed checklist at move-in are your best defense against a deposit fight at move-out.
- Offer the pre-move-out inspection. California lets tenants request an initial inspection so they can fix issues before they leave. Offer it in writing — it shrinks disputes.
- Keep receipts. Any deduction over $125 needs documentation. No receipt, no deduction.
- Charge for damage, not wear. A worn carpet after five years is normal wear. A wine stain and a burn are damage. Know the difference before you deduct.
If tracking all of this on top of tenant screening and maintenance feels like a second job, that’s usually the moment owners call me. I covered the front end of a clean tenancy in my guide to tenant screening in San Diego, and how to keep good tenants longer in reducing tenant turnover.
Frequently asked questions
Can I still charge last month’s rent plus a deposit?
If you collect last month’s rent, it counts toward the one-month deposit cap. You can’t stack a full month’s deposit on top of prepaid last month’s rent to get around the limit.
Does the cap apply to leases signed before July 2024?
The one-month cap applies to deposits collected on or after July 1, 2024. For existing tenancies, talk to a qualified attorney before making any change to a deposit already held.
Can I deduct for cleaning?
You can deduct the reasonable cost to return the unit to its move-in level of cleanliness — not to make it cleaner than when the tenant arrived. Documentation of the move-in condition is what makes this defensible.
Want your rental run by the book?
We handle deposits, inspections, and compliance for San Diego owners so a 21-day clock never catches you off guard. Let’s talk about your property.
Amara Berg, CA DRE #01961620 · Big Returns, CA DRE #02322119. This article is general education about California’s security deposit rules (AB 12; Civil Code 1950.5) and is not legal advice. Landlord-tenant law changes and applies to individual facts — consult a qualified California attorney before acting. Equal Housing Opportunity.