California Security Deposit Rules Every San Diego Landlord Should Know

Security deposits are the single most common source of landlord–tenant disputes in California, and the rules changed meaningfully with AB 12. If you own rental property in San Diego, three things matter most: how much you can collect, how fast you have to return it, and what you can actually deduct.

This article is general information, not legal advice. Talk to a California real estate attorney about your specific situation.

The cap is now one month's rent

As of July 1, 2024, AB 12 limits most residential security deposits to one month's rent, whether the unit is furnished or not. The old two-months (unfurnished) and three-months (furnished) ceilings are gone for most owners.

There is a narrow exception for small landlords: an owner who is a natural person (or an LLC whose members are all natural persons) and who owns no more than two residential properties totalling no more than four units may collect up to two months' rent. Service members have separate protections.

The practical effect for most San Diego owners is simple — if you are still quoting "first, last, and security," check whether that still fits under the cap.

The 21-day clock

After a tenant moves out, you have 21 calendar days to either return the deposit in full or deliver an itemised statement showing what was withheld and why. Miss the deadline and you risk forfeiting deductions entirely, plus exposure to bad-faith penalties of up to twice the deposit.

Twenty-one days sounds generous until you are waiting on a contractor's final invoice. If work is not complete, you may provide a good-faith estimate and follow up with the actual receipts.

What you can deduct — and what you cannot

You may deduct for:

• Unpaid rent
• Cleaning to return the unit to its condition at move-in
• Repair of damage beyond ordinary wear and tear
• Restoration of items the tenant removed, if the lease allows it

You may not deduct for ordinary wear and tear. This is where most disputes live, and the line is less mysterious than it seems:

| Ordinary wear and tear | Tenant damage | |---|---| | Faded paint, minor scuffs | Crayon murals, large holes | | Worn carpet traffic lanes | Pet stains through to the pad | | Loose door handles | Doors off hinges, broken frames | | Minor nail holes from pictures | Anchor holes through drywall |

Documentation is the whole game

Nearly every deposit dispute comes down to evidence. California also gives tenants the right to request an initial inspection before move-out so they have a chance to fix issues themselves — and to be present for it.

Photograph everything at move-in and move-out, timestamped, room by room. Paired photo sets are the difference between a defensible deduction and a refunded one. Our platform runs AI-assisted photo inspections that compare move-out images against the move-in baseline and flag what is genuinely new damage versus what is simply age — which is exactly the distinction the statute turns on.

A short checklist

1. Confirm your deposit amount fits the AB 12 cap.
2. Do a documented move-in inspection with photos.
3. Offer the pre-move-out initial inspection in writing.
4. Return the deposit or an itemised statement within 21 days.
5. Keep receipts — estimates alone will not carry a dispute.

If you would rather not track the 21-day clock yourself, see how we manage move-outs end to end.