New California Security Deposit Law Takes Effect

New California Security Deposit Law Takes Effect

Today, July 1, a new California law is now in effect limiting security deposits to one month’s rent for both furnished and unfurnished units. This legislation, AB 12 by Assemblyman Matt Haney, D-San Francisco, was signed into law by Gov. Gavin Newsom in October 2023, introducing a significant shift. Previously, landlords could charge up to two months’ rent for an unfurnished unit and three months’ rent for a furnished one, except in cases where the tenant was a service member.

An important exception is included in the new law for certain small landlords as property owners with no more than two residential rental properties, collectively including no more than four dwelling units offered for rent, may still collect up to two months’ rent as a security deposit. To qualify for this exception, the owner must hold the property as a natural person, a limited liability company (in which all members are natural persons), or as a family trust. However, this exception does not apply when the tenant is a military service member.

“It’s crucial for landlords across California to understand and comply with these updated security deposit regulations,” said Whitney Prout, executive vice president of legal affairs for the California Apartment Association. “We strongly encourage all CAA members to review our updated security deposits background paper, which reflects the changes brought by AB 12. This resource is designed to help our members navigate this significant change and ensure they’re operating within the bounds of the new law.”

To further assist landlords in understanding and implementing the new law, CAA will host a webinar on July 30 titled “Security Deposits Ins and Outs.” The webinar will cover key requirements of the law, including the recent changes, maximum allowed security deposits, permissible deductions, the walkthrough process, and return requirements.

Epps & Coulson, LLP maintains a staff of dedicated professionals who carefully monitor state legislation.  We are available to help you navigate all your landlord-tenant matters to ensure compliance.  Contact Dawn Coulson at: for any questions you may have.

Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.  It is likely considered advertising.  Epps & Coulson, LLP encourages you to call to discuss these matters as they apply to you or your business.

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