Whether you’re a landlord or a tenant, understanding California’s updated security deposit laws is essential in 2025. With major statewide changes now in effect, compliance isn’t just about playing it safe. It’s the key to protecting your business, your tenants’ rights, and avoiding costly legal mistakes. Even more updates are coming in the future.
These rules apply across California. Many cities layer on even stronger protections for tenants. If you own or plan to manage property in places like Los Angeles, Santa Monica, Glendale, Pasadena, Long Beach, El Segundo, Culver City, Beverly Hills, or Burbank, here’s what you need to know.
New Cap on Security Deposits
As of July 1, 2024, California law limits the amount landlords can charge for a security deposit. For most rentals, the maximum deposit is one month’s rent. This cap applies regardless of whether the unit is furnished or unfurnished.
However, there's one exception. If the landlord is a “natural person” or a single-member LLC that owns no more than two rental properties with a total of four or fewer units. In that situation one can still charge up to two months’ rent. This exception is meant to protect small “mom and pop” landlords. Larger property owners must stick to the one-month rule.
This update, part of AB 12, applies to all residential leases statewide, including in the cities listed above.
Deposit Return Deadlines
When a tenant moves out, the landlord has 21 calendar days to return the security deposit. This includes providing a detailed breakdown of deductions and returning the remaining balance. Landlords must also include an itemized statement. If any money is withheld, supporting documentation also needs to be shared. As of 2025, these documents also include a new requirement: photos.
New Photo Requirements at Three Key Stages (AB 2801)
To legally deduct from a security deposit, landlords now need to take and retain photographic evidence at these three points:
Move-Out Photos – Taken after the tenant vacates but before any cleaning or repairs.
Post-Repair/Cleaning Photos – To document completed work.
Move-In Photos – Required for all new tenancies started July 1, 2025, or later.
These photos must be provided along with an itemized statement and receipts if any deductions are made.
What’s at Stake?
Failing to comply could mean forfeiting the right to withhold any part of the deposit. Worse, noncompliant landlords could face statutory damages of up to twice the deposit amount. It's a costly penalty for missing a few snapshots.
What The Martin Feinberg Team is Doing
To better handle this requirement, the Martin Feinberg team has updated inspection protocols. As of July 1, 2025, California’s AB 2801 is fully in effect. It brought changes to how landlords handle security deposit deductions. Here are the steps we've taken to update inspection protocols:
Audited move-in/move-out workflows.
Created and updated inspection templates.
Trained the team on photo documentation protocols.
Our goal is to streamline compliance and protect your business. AB 2801 isn’t just a paperwork issue. It’s a liability one. We're treating it that way.
What Landlords Can (and Can’t) Deduct
Under California law, landlords may only use the security deposit for a few specific things:
Repairing damage beyond normal wear and tear.
Cleaning the unit to the condition it was in at move-in.
Unpaid rent.
Landlords cannot use the deposit for general carpet cleaning or other routine maintenance. The one exception is if they can prove it was necessary beyond regular wear. And importantly, landlords cannot force tenants to hire a specific cleaner or contractor. Clear records and before-and-after photos are the best defense in case of a dispute.
Interest on Deposits: City-Specific Requirements
Some cities go a step further. In Los Angeles, for example, landlords must pay interest on security deposits each year. The LA Rent Stabilization Board sets the rate annually. It’s 5.0% for the period from March 1, 2025, through February 28, 2026.
Santa Monica also requires interest payments, with enforcement overseen by its Rent Control Board. If your property is located in one of these cities, make sure you’re following these local interest rules.
How Local Ordinances Interact With State Law
Cities like Los Angeles and Santa Monica have long histories of strong tenant protections. Their local ordinances may set stricter rules for how deposits are held, how they must be returned, or when they can be withheld. Even cities that don’t have rent control (like El Segundo, Glendale, Pasadena, and Burbank) often have tenant protection programs or guidelines that build on state law.
In all cases, landlords should check both California Civil Code § 1950.5 and local city ordinances to make sure they’re in full compliance.
Penalties for Noncompliance
Failing to follow the rules can lead to serious consequences. Landlords who wrongly withhold deposits, skip documentation, or fail to return funds within the 21-day window may face:
Tenant lawsuits (small claims or otherwise).
Damages up to 2x the amount of the deposit.
Loss of the right to withhold any deposit.
Fines or enforcement action by local rent boards or city attorneys.
Even unintentional mistakes, like forgetting to take photos, can cost you in court. It’s better to do things by the book from the start.
Best Practices for 2025 and Beyond
To stay protected and maintain a good relationship with tenants, here are some smart practices to follow:
Do a walkthrough inspection with the tenant at move-in and take clear, dated photos of the entire unit.
Repeat the photo process after move-out, especially before and after any cleaning or repairs.
Keep receipts and records for any deductions.
Return the deposit or send itemized deductions within 21 days—no exceptions.
Track city-specific requirements, including interest payments or special notices.
Final Thoughts
California’s new security deposit laws are meant to create transparency and fairness for both tenants and landlords. By staying organized, following the updated rules, and documenting every step of the rental process, landlords can avoid legal trouble. These measures also build trust with tenants.
If you manage properties in places like Culver City, Pasadena, Santa Monica, Burbank, or Los Angeles, local rules might apply in addition to state law. When in doubt, consider hiring a full service property manager.
