Kai Rivers
California has strict security deposit laws, with specific rules that landlords must follow. From July 1, 2024, the maximum security deposit a landlord can ask for will be one month's rent, according to Assembly Bill 12. This law will apply to furnished and unfurnished properties, and there will be no exception for pet deposits or last month's rent. Landlords are allowed to collect one month's prepaid rent (first month's rent) plus a security deposit. Previously, landlords could charge up to two months' rent for unfurnished dwellings and three months' rent for furnished dwellings as a security deposit.
| Characteristics | Values |
|---|---|
| Security deposit limit | Two months' rent for unfurnished units and three months' for furnished ones |
| Security deposit maximum | Two months' rent for unfurnished dwellings and three months' rent if furnished |
| Prepaid rent | One month's prepaid rent (first month's rent) plus two or three months' security deposit |
| Upcoming changes | From July 1, 2024, it will be illegal for landlords to require a security deposit of more than one month's rent |
| Exception | Landlords who are natural people owning no more than two residential rental properties with a total of four units can ask for two months' rent |
| Rent due date | Unless there is a contract stating otherwise, rent is due at the end of the month for leases of less than one year; most leases state the beginning of the month |
| Payment methods | Landlords must accept non-cash and non-electronic payment methods, but can require cash payments if previous payments were insufficient |
| Last month's rent | It is common practice to pay the last month's rent upfront to prevent eviction during the final month |
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What You'll Learn
Landlords can charge first and last month's rent upfront
In California, landlords can charge first and last month's rent upfront. This is separate from any security deposit that they may also require. From July 1, 2024, a new law, Assembly Bill 12, will come into effect, which states that a rental property owner cannot demand or receive a security deposit of more than one month's rent. This means that landlords will only be able to charge first and last month's rent upfront if the security deposit is included within the last month's rent.
The new law will not affect all landlords, as there is an exception for natural persons or limited liability companies with all members being natural persons, who own no more than two residential rental properties with a collective total of four dwelling units. In these cases, landlords will be permitted to charge up to two months' rent as a security deposit.
It is important to note that the security deposit is the tenant's money and is held in trust. It should only be used to cover unpaid rent or for repairs and cleaning of the property after a tenant has vacated the premises. If a landlord unlawfully withholds a security deposit, they may be subject to statutory damages of up to twice the amount of the deposit, in addition to actual damages.
In California, it is also against the law for a landlord to require a security deposit of more than two months' rent for unfurnished dwellings or three months' rent for furnished dwellings. This law will change with the introduction of Assembly Bill 12, which will limit security deposits to one month's rent for all properties, regardless of whether they are furnished or unfurnished.
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Security deposits are limited to one month's rent
In California, the security deposit limit depends on the unit type—typically two months' rent for unfurnished units and three months' rent for furnished ones. However, a new law, Assembly Bill 12 (AB 12), will take effect starting July 1, 2024, which states that landlords cannot demand or receive a security deposit exceeding one month's rent.
AB 12 stipulates that a rental property owner cannot demand or receive a security deposit in an amount that is more than one month's rent. This means that landlords can no longer require tenants to pay two or three months' rent as a security deposit, which was previously common practice in California. The new law is intended to protect renters from the financial burden of high upfront costs when moving into a new rental property.
There is, however, an exception to the one-month limit. Landlords who are natural persons owning no more than two residential rental properties with a collective total of no more than four units can qualify for a maximum security deposit of two months' rent. This exception recognises the potential financial risk for small-scale landlords while still offering tenants some relief from high security deposits.
It's important to note that this upcoming change in California law specifically addresses security deposits and does not include rent. Landlords can still require the first month's rent upfront, as well as the last month's rent in certain cases. This means that while the security deposit cap will provide some financial relief for tenants, they may still need to budget for multiple months' worth of rent when signing a new lease.
The implementation of AB 12 in California is a significant step towards addressing the financial challenges faced by renters. By limiting security deposits to one month's rent, with limited exceptions, the new law will make renting more accessible and reduce the upfront costs associated with moving into a new home.
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Security deposits for unfurnished units
In California, security deposits are typically 1 to 2 months' rent for unfurnished units. However, there are specific rules that landlords must follow regarding security deposits. The security deposit is the tenant's money, held in trust in case something goes wrong, such as damage to the property or unpaid rent.
Until July 1, 2024, landlords could charge up to two months' rent as a security deposit for an unfurnished unit. After this date, a new law, Assembly Bill 12, came into effect, limiting security deposits to a maximum of one month's rent for both furnished and unfurnished units. This law includes an exception for small landlords or those with few properties, permitting them to collect up to two months' rent as a security deposit if certain criteria are met. These criteria include the landlord being a natural person or a limited liability company with all members as natural persons and owning no more than two rental properties with a total of four dwelling units.
Landlords are required to return the security deposit within 21 days of a tenant moving out, although they may keep a portion of it to cover any necessary repairs, cleaning expenses, or unpaid rent (excluding COVID-19 rental debt). If a tenant ends their lease early due to violence, the landlord cannot use the security deposit as a penalty or to cover the remaining rental period.
It is important to note that California law treats “pet deposits” as part of the overall security deposit limit, and landlords cannot charge extra for service animals. Additionally, landlords must provide tenants with the opportunity for a pre-inspection, allowing tenants to make repairs and potentially receive their full security deposit back.
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Security deposits for furnished units
California's security deposit laws underwent a significant change in 2024, with the implementation of Assembly Bill 12 (AB 12). This new legislation limits security deposits to a maximum of one month's rent for both furnished and unfurnished units. This change aims to reduce the financial burden on renters, especially in areas with high housing costs.
Prior to AB 12, landlords in California could charge up to two months' rent as a security deposit for unfurnished units and three months' rent for furnished units. The new law now standardizes the security deposit requirement across furnished and unfurnished units, capping it at one month's rent.
However, there is an exception to this rule for small landlords. Landlords who own no more than two residential rental properties, with a collective total of four or fewer units, are permitted to collect up to two months' rent as a security deposit. To qualify for this exception, the landlord must hold the property as a natural person or through a limited liability company where all members are natural persons.
It is important to note that the security deposit is the tenant's money. It is held in trust to cover any potential damages, unpaid rent, or cleaning and repair costs beyond normal wear and tear. Landlords are required to provide an itemized statement of any deductions made from the security deposit and must return the remaining deposit to the tenant within 21 days of their move-out.
While California's security deposit laws have changed, landlords can still require the first month's rent upfront, and tenants may negotiate their rent payment methods. Additionally, late fees are allowed but must be considered "reasonable" and obey rent control laws.
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Payment methods for rent
In California, landlords can charge first and last month's rent plus a security deposit at lease signing. The security deposit limit depends on the unit type—typically two months' rent for unfurnished units and three months' rent for furnished units. From July 1, 2024, under Assembly Bill 12 (AB 12), landlords will not be allowed to demand or receive a security deposit exceeding one month's rent, with certain exceptions for landlords who meet specific criteria. These exceptions include landlords who are natural persons owning no more than two residential rental properties with collectively no more than four units.
Regarding payment methods for rent, California law stipulates that landlords must allow tenants to pay rent using a form of payment other than cash or electronic funds transfer. If a tenant has insufficient funds or stops payment on a money order, the landlord can then require that rent be paid in cash.
It is worth noting that California law also covers security deposit interest. While there is no statewide statute, some localities, including cities in the San Francisco Bay Area and Los Angeles, have rent control ordinances that require landlords to pay interest on security deposits.
Additionally, California law provides protections for tenants in the event of a landlord's bad faith claim or retention. If a landlord acts in bad faith, they may be subject to statutory damages of up to twice the amount of the security deposit, in addition to actual damages.
In summary, while California landlords can currently charge up to two months' rent as a security deposit for unfurnished units, this will change in July 2024 when AB 12 takes effect, limiting security deposits to a maximum of one month's rent in most cases. Landlords must also provide alternative payment methods for rent besides cash or electronic funds transfer, and adhere to local regulations regarding security deposit interest and tenant protections.
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Frequently asked questions
No, but landlords can charge first and last month's rent upfront, plus a security deposit.
From July 1, 2024, landlords cannot demand a security deposit that exceeds one month's rent. There is an exception for natural persons owning no more than two rental properties with no more than four units, who can ask for two months' rent as a security deposit.
The security deposit is the tenant's money, held in trust in case something goes wrong. It can be used for unpaid rent or to pay for repairs and cleaning of the property.
Any and all money that a tenant is required to give the landlord at the commencement of the tenancy, other than rent and background check costs, falls under the security deposit umbrella. This includes pet deposits, damage deposits, key deposits, cleaning deposits, last month's deposits, and general security deposits.
The maximum security deposit that can be charged is $3000. The landlord can ask for this amount or break it up into different categories, but the total amount of all money a tenant must pay to move in cannot exceed this cap.
