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Mohammad Noorzay

Real Estate Specialist - Lic #02016268 Berkshire Hathaway Homeservices DRE #01317331

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Maximum security deposit that a residential landlord

July 31,2024 | Posted By Mohammad Noorzay in Moving

Tip is a reminder that, starting on July 1, 2024, the maximum security deposit that a residential landlord can generally demand is the dollar equivalent of only one month’s rent for either a furnished or unfurnished property. Certain small-time landlords can still collect a security deposit up to 2 months’ rent (furnished or unfurnished) if all of the following 3 requirements are met: (1) The landlord is a natural person, a family trust as defined, or an LLC as long as every LLC member is a natural person; (2) The landlord owns no more than 2 residential rental properties with a collective total of no more than 4 units offered for rent; and (3) The tenant is not an active military service member.

C.A.R. recently revised its standard-form Residential Lease or Month-to-Month Rental Agreement (RLMM) and Residential Lease After Sale (RLAS) to reflect the new security deposit law. C.A.R. has also drafted a new Security Deposit Disclosure and Addendum (SDDA) to be used for small-time landlords, and active military service members, when applicable.

If a landlord falls under the new one-month max law, the maximum amount of money that can generally be collected upfront is the first month’s rent, plus a security deposit, however denominated, equal to one-month’s rent. A landlord cannot circumvent this law by labeling funds collected upfront as a cleaning fee, pet deposit, last month’s rent, or similar things.

The new law does not affect landlords who already collected or demanded security deposits before July 1, 2024.

Source: The full text of this law is set forth at section 1950.5(c) of the California Civil Code, available at https://leginfo.legislature.ca.gov/.

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