California security deposit rules are detailed, and compliance matters from the moment you collect money through the tenant’s move-out. For San Diego County landlords and property owners, the central rule is California Civil Code section 1950.5, as amended by AB 12, AB 2801, and other recent legislation.

This checklist explains what you may collect, what you should document, how to handle deductions, and what you must send within 21 calendar days. It is designed for property owners in San Diego, El Cajon, La Mesa, Santee, Spring Valley, and throughout the county.

Important: This article provides general information, not legal advice for a specific tenancy. Review the current text of California Civil Code section 1950.5 before adopting policies or making deductions.

How much security deposit may you collect in California?

Most California landlords may collect no more than one month’s rent as a residential security deposit. The cap applies whether the unit is furnished or unfurnished and generally applies to tenancies beginning after July 1, 2024.

A narrow exception allows an eligible small landlord to collect up to two months’ rent. Both of these conditions must be met:

• The landlord is a natural person or an LLC whose members are all natural persons.
• The landlord owns no more than two residential rental properties containing no more than four total dwelling units offered for rent.

The exception does not apply in every situation. For example, it does not apply when the prospective tenant is a service member. If you are uncertain whether your San Diego rental portfolio qualifies, confirm the ownership structure and unit count before collecting the deposit.

What payments count toward the security deposit cap?

The cap applies based on the purpose and substance of the payment, not simply the label used in the lease. Civil Code section 1950.5 broadly defines “security” to include payments, fees, deposits, or charges imposed at the beginning of the tenancy to protect the landlord against nonpayment, damage, cleaning, or other rental-agreement obligations.

Use this checklist before collecting additional amounts:

• Pet deposits: Generally count toward the cap because they protect against potential damage or cleaning costs.
• Key deposits: May count as security when they are collected to protect against a tenant’s failure to return keys or access devices. Any amount should be reasonable and tied to the actual item.
• Cleaning fees: A refundable cleaning deposit generally counts toward the cap. A landlord may not avoid the cap simply by calling a security deposit a “cleaning fee.”
• Last month’s rent: An advance payment of rent may count toward the cap when it functions as security. A lease may involve special rules for advance rent, including an exception for certain six-month-or-longer leases, so review the arrangement carefully.
• Nonrefundable deposits: A lease may not characterize residential security as “nonrefundable.”
• Application or screening fees: These are governed separately by Civil Code section 1950.6 and should not be confused with security deposits.

A good practice is to create one written schedule showing every amount collected at move-in and how each amount is treated under California law.

What should you document before or at move-in?

Move-in documentation is your best evidence of the property’s original condition. For tenancies beginning on or after July 1, 2025, California law requires the landlord to take photographs immediately before, or at the inception of, the tenancy.

Your move-in file should include:

• A signed rental agreement and a receipt showing the deposit amount.
• A room-by-room condition checklist.
• Dated photographs of floors, walls, ceilings, appliances, windows, doors, fixtures, bathrooms, kitchens, patios, garages, and included furnishings.
• Close-up photographs of existing stains, scratches, dents, broken items, or other conditions.
• Meter readings or utility information when relevant.
• Written confirmation of keys, remotes, parking permits, and other property provided to the tenant.
• Copies of communications about preexisting conditions or agreed repairs.

Use a consistent naming system for photographs, such as the property address, room, and date. Store the original files in a location that preserves metadata and prevents accidental deletion. Photographs do not replace a written condition report; you should use both.

What must happen before the tenant moves out?

When a tenancy is ending, you must provide written notice explaining that the tenant may request a pre-move-out inspection and has the right to be present. The inspection generally occurs no earlier than two weeks before the termination date or lease expiration.

If the tenant requests the inspection, give at least 48 hours’ written notice of the inspection time unless the parties agree in writing to a shorter notice period. After the inspection, provide an itemized list of proposed repairs or cleaning that could result in deductions. The tenant must have an opportunity to correct eligible conditions before moving out.

The pre-move-out inspection is not permission to charge for ordinary wear and tear. It is an opportunity to identify tenant-caused conditions that the tenant may be able to remedy before possession ends.

What must you do within 21 calendar days after move-out?

Within 21 calendar days after the tenant vacates and returns possession, you must either:

1. Return the entire deposit; or
2. Return the remaining balance and provide an itemized statement explaining every deduction.

The itemized statement should identify:

• The specific charge.
• The reason for the charge.
• The exact dollar amount.
• The supporting invoice, receipt, or labor calculation when required.
• The remaining balance being returned.

If the repair or cleaning deduction exceeds $125 in the aggregate, you generally must provide supporting documents and photographs with the itemized statement. If you or an employee performed the work, describe the work, time spent, and reasonable hourly rate. If a contractor performed the work, provide the bill, invoice, or receipt and identifying information for the service provider when necessary.

When the deduction is $125 or less, the statute provides a limited documentation exception. However, a tenant may request the supporting documentation within 14 days after receiving the statement. Retaining complete records and providing them when requested is the safer practice.

What photographs are required under AB 2801?

When you plan to deduct for repairs or cleaning, take photographs at these stages:

• Move-in: Immediately before or at the beginning of a tenancy covered by the July 1, 2025 requirement.
• After move-out: Within a reasonable time after possession is returned and before repairs or cleaning begin.
• After the work: Within a reasonable time after the repairs or cleaning are completed.

Use date-stamped photographs whenever possible. The before-and-after images should clearly relate to the condition and charge described in the itemized statement.

When required, provide the photographs at the same time as the itemized statement. You may generally provide them by mail, email, flash drive, or an online link. Keep a copy of what you sent and proof of delivery.

What is normal wear and tear versus damage?

You may deduct only amounts reasonably necessary to address allowable charges. You may not charge the tenant for preexisting defects, ordinary wear and tear, or upgrades that improve the property beyond its move-in condition.

Examples of ordinary wear and tear may include:

• Minor carpet wear from ordinary walking.
• Faded paint from normal occupancy.
• Small nail holes from reasonable picture hanging.
• Aging fixtures that fail through ordinary use.

Potential damage may include:

• Large holes or broken doors caused by the tenant or guests.
• Excessive stains, burns, or tears beyond ordinary use.
• Missing fixtures or property listed in the rental agreement.
• Damage caused by unauthorized alterations.

Cleaning deductions must be limited to the actual cleaning necessary to return the unit to the same level of cleanliness as at move-in. Routine professional carpet cleaning is not automatically chargeable. The work must be reasonably necessary, and the charge must be reasonable.

How should you return the deposit?

For traditional refunds, the remaining deposit may generally be delivered personally or mailed by first-class mail. Effective January 1, 2026, if you received the deposit or rent electronically, you must generally return the remaining deposit electronically to an account or financial institution designated by the tenant in writing, unless the parties have a written agreement choosing another method.

You should request and retain the tenant’s forwarding address and written electronic payment instructions. If multiple adult tenants are on the lease, use a written agreement addressing how the refund and itemized statement will be handled.

What penalties apply for bad-faith withholding?

A landlord who keeps a deposit or demands replacement security in bad faith may face statutory damages of up to twice the amount of the security deposit, in addition to actual damages. Because the wrongfully withheld deposit may also be at issue, the potential exposure is often described as the deposit itself plus up to twice the deposit in damages.

The landlord has the burden of proving that deductions were authorized and reasonable. A complete move-in report, dated photographs, inspection records, invoices, and timely correspondence can help demonstrate compliance.

How long should you retain security deposit records?

Retain the complete security deposit file for at least four years after the tenancy ends. Keep the lease, payment records, inspection notices, condition reports, photographs, invoices, itemized statements, delivery proof, tenant communications, and refund records together.

Four years is a practical retention recommendation, not a substitute for reviewing any longer period required by another law, contract, insurance policy, or pending dispute.

What happens if the property owner files for bankruptcy?

A tenant’s security deposit is held for the tenant and has priority over the landlord’s creditors under Civil Code section 1950.5. If a San Diego property owner files bankruptcy, the tenant should promptly identify the deposit, the lease, and the landlord’s records to bankruptcy counsel.

California’s ordinary residential security-deposit statute does not expressly require every individual landlord to maintain a separate bank account. Nevertheless, treating deposits as tenant funds and keeping them segregated is a prudent compliance practice. A true escrow or broker trust account may receive different treatment from commingled operating funds, and the result depends on how the deposit was held and on federal bankruptcy law.

The Law Office of Andrew H. Griffin, III, APC can help business owners evaluate bankruptcy, real estate, and landlord-tenant issues together. Learn more about the firm’s bankruptcy practice and real estate practice.

Your 2026 San Diego security deposit checklist

Before collecting or returning a deposit, confirm that you have:

• Calculated the correct one-month or qualified small-landlord two-month cap.
• Included pet, key, cleaning, and other security-related charges in the cap.
• Taken and preserved move-in photographs when required.
• Completed a written move-in condition report.
• Offered the tenant a written pre-move-out inspection.
• Taken post-move-out photographs before cleaning or repairs.
• Limited deductions to rent, tenant-caused damage, necessary cleaning, and other authorized charges.
• Compared the move-out condition with the documented move-in condition.
• Collected invoices, receipts, and labor details.
• Sent the refund and itemized statement within 21 calendar days.
• Included required photographs when the documentation rules apply.
• Used the appropriate refund method for electronic payments.
• Retained the complete file for at least four years.

Security deposit compliance also connects to the broader eviction process. If a tenancy dispute involves possession, unpaid rent, or a notice, searching for an eviction attorney San Diego, a San Diego eviction attorney, or eviction lawyers San Diego should lead you to counsel experienced with the full landlord-tenant timeline, not just the deposit issue.

For guidance with a security deposit, eviction, real estate transaction, or bankruptcy matter, contact the Law Office of Andrew H. Griffin, III, APC. Andrew Griffin is both a California-licensed attorney and a California-licensed real estate broker, offering legal and real estate perspective to property owners throughout San Diego County. Call 619 853-3009, text 619 330-5456, or use the firm’s contact page.