AB 12: California’s Security Deposit Law (2024)

California passed AB 12, and it became law on January 1, 2024. This bill dramatically changed how much landlords can collect for security deposits.

At Mission City, we know this is one of the most common questions landlords ask: “How much can I charge for a deposit now?”

Here’s what you need to know.

1. What AB 12 Says

• Landlords can now collect no more than one month’s rent as a security deposit.

• This limit applies whether the unit is furnished or unfurnished.

• It covers all upfront deposits — pet deposits, cleaning deposits, or last month’s rent deposits all roll into that one-month cap.

• 📌 Source: AB 12 amended California Civil Code § 1950.5, the section that regulates residential security deposits. (California Legislative Info)

2. Exemption for “Small Landlords”

AB 12 has one limited carve-out:

• If you own no more than two properties (and a total of four rental units or fewer) and you are not a corporate or REIT landlord, you may still collect up to two months’ rent.

• But this exemption is narrow — it only applies to true small-scale owners.

• For most landlords and all property management companies, the cap is one month only.

3. Why It Matters for Landlords

For decades, California allowed up to:

• Two months’ rent for unfurnished units.

• Three months’ rent for furnished units.

AB 12 cut that down to one month across the board.

This means:

• Less upfront protection for landlords against damage or nonpayment.

• Higher importance of thorough screening and tenant insurance products

4. Penalties for Violating AB 12

If you collect more than allowed:

• Tenants can sue to recover deposits.

• You may face statutory penalties, damages, and attorney’s fees under California Civil Code § 1950.5.

• Courts may also order return of the excess deposit immediately.

5. Mission City’s Approach

AB 12 makes screening and risk-management even more important. To streamline and stay consistent, Mission City applies the one-month deposit standard across all properties we manage — even when exemptions technically apply.

Key Takeaways

• AB 12 (effective Jan 1, 2024): Security deposits are capped at one month’s rent.

• Exemption: small landlords with 2 properties/4 units or fewer (not corporations/REITs).

• Violations = legal penalties, tenant lawsuits, and forced refunds.