Security Deposit Deductions in California: What Owners Can (and Can't) Charge

No part of the landlord-tenant relationship generates more small claims cases than the security deposit. The rules in Civil Code section 1950.5 are specific — what you can deduct, how fast you must account for it, and what documentation you owe the tenant — and they tightened twice recently: AB 12 capped deposits at one month’s rent in 2024, and AB 2801 added photo-documentation requirements starting in 2025.

Here is what California owners can actually charge against a deposit, and the process discipline that keeps deductions enforceable.

How much you can collect: the one-month cap

Since July 1, 2024, AB 12 limits security deposits to one month’s rent— furnished or unfurnished — collected in addition to the first month’s rent.

There is a narrow small-owner exception: a landlord who is a natural person (or an LLC made up entirely of natural persons, or a family trust) and owns no more than two residential rental properties totaling four or fewer unitsmay collect up to two months’ rent. Even then, the exception does not apply to tenants who are service members. Everything a landlord collects up front that isn’t first month’s rent — “last month’s rent,” pet deposits, key deposits — counts toward the cap.

The only four things a deposit can cover

Civil Code 1950.5 allows deductions for exactly four purposes:

• Unpaid rent the tenant owes at move-out.
• Cleaning — but only to return the unit to the level of cleanliness it had at move-in. You cannot bill a full professional deep-clean as a matter of routine if the tenant left the unit as clean as they received it.
• Repair of damage beyond ordinary wear and tear caused by the tenant or their guests.
• Restoring or replacing the owner’s personal property (furniture, for example), if the lease allows it.

Under AB 2801, deductions must also be reasonably necessary — a standard aimed squarely at padded move-out invoices.

Normal wear and tear vs. damage

The line that decides most disputes. Normal wear and tear is the deterioration that comes from ordinary living — the owner’s cost of doing business. Damage is what a tenant did beyond that.

• Normal wear (not deductible): faded or lightly scuffed paint, small nail holes from hanging pictures, carpet worn flat in walkways, loose grout, sun-faded blinds.
• Damage (deductible): large holes in drywall, pet stains and odors, cigarette burns, broken fixtures or appliances, unauthorized paint colors, carpet stains or tears, missing doors or hardware.

Useful-life proration: the part most owners get wrong

Even for genuine damage, you generally cannot charge a tenant the full replacement cost of something that was already partway through its life. Courts routinely prorate deductions by the item’s remaining useful life, and well-run management companies build deductions the same way.

The classic example: a carpet with a ten-year expected life is destroyed in year six. The tenant is responsible for the four years of value that remained — roughly 40% of replacement cost — not a brand-new carpet. Interior paint is commonly treated as having a useful life of just a few years, which is why charging a long-term tenant for a full repaint rarely survives scrutiny.

Exact lifespans aren’t set by statute, so documentation wins arguments: keep records of when flooring, paint, and appliances were installed or last replaced, and show your proration math on the itemized statement.

The 21-day rule and the paper trail

Within 21 calendar days of the tenant vacating, you must send an itemized statement of deductions and refund the balance. The statement has real documentation requirements:

• If total deductions for repairs and cleaning exceed $125, you must attach copies of receipts and invoices showing the work and who performed it.
• If you or your staff did the work, describe the work, the time it took, and the hourly rate — and the rate must be reasonable.
• If work isn’t finished within the 21 days, you may send a good-faith estimate, then final receipts within 14 days of completion.

Two more process rights matter. Tenants can request an initial move-out inspection during the final two weeks of the tenancy, and you must provide an itemized list of proposed deductions so they have a chance to fix issues themselves. And under AB 2801, you must photograph the unit after move-out (before any work), again after repairs or cleaning are completed, and share the photos with the itemized statement — plus move-in photos for tenancies starting on or after July 1, 2025.

The penalty for cutting corners is steep: bad-faith retention exposes an owner to up to twice the deposit in statutory damages, on top of returning what was wrongfully withheld.

The owner’s checklist

1. Collect no more than the AB 12 cap, and label move-in funds correctly.
2. Complete a documented move-in condition report with date-stamped photos.
3. Keep installation dates for paint, flooring, and appliances so proration is defensible.
4. Offer the pre-move-out inspection in writing when notice is given.
5. Photograph move-out condition before and after any work, keep every invoice, and send the itemized statement inside 21 days.

This is exactly the kind of process that benefits from being systematized. Our move-in and move-out condition reports, photo documentation, and itemized statements run through a documented workflow on every property we manage — deductions hold up because the file was built from day one, not reconstructed after a dispute.

Common questions