New Law on Security Deposits

NOTICE: New Law on Security Deposits

Under AB 12, effective July 1, 2024, landlords can only charge security deposits up to one month's rent for unfurnished and furnished units. Landlords who only own two rental properties with no more than four units total can charge up to two month's rent for the security deposit, unless the tenant is in the military. This exception applies when ownership is held by natural persons, a family trust, or LLCs where all the members are natural persons. 

In Most Cases, the Security Deposit Amount is Limited to One Month’s Rent

On or after July 1, 2024, landlords may only collect a security deposit equal to one month’s rent.  Even when a security deposit includes or is called “last month’s rent,” a landlord can only charge up to one month’s rent for the entire deposit. For example, if the rent is $2,000 per month, the maximum amount the landlord can collect prior to the start of the tenancy would be $4,000 ($2,000 for the first month’s rent and $2,000 for the security deposit, however it is referred to in the lease agreement). The landlord cannot collect $2,000 for the security deposit, and another $2,000 for last month’s rent.

In Some Cases, Landlords With Fewer Units May Charge Up To Twice the Rent For the Security Deposit

A landlord may charge up to two times the rent for the entire security deposit if both of the following are true:

  1. The landlord is a natural person or a limited liability company (LLC) in which all members are natural persons.
  2. The landlord owns no more than two residential properties that contain no more than four dwelling units offered for rent.

In these cases, for a unit with a $2,000 monthly rent, the landlord may collect up to $6,000 prior to the start of the tenancy: $2,000 for first month’s rent, and up to $4,000 for the security deposit (however it is referred to in the lease agreement).

Please read the law for more details.