California's AB 12 Cut Security Deposits to One Month

What changed

California's Assembly Bill 12 took effect July 1, 2024, capping most residential security deposits at one month's rent — for both furnished and unfurnished units. Previously, landlords could collect up to two months (unfurnished) or three months (furnished).

The small-landlord exception

There's a carve-out: a landlord who is a natural person (or an LLC whose members are all natural persons) and who owns no more than two residential properties totaling no more than four units may still collect up to two months' rent. Even then, the exception doesn't apply if the prospective tenant is a service member.

What landlords should do

• Update lease templates and listing terms to reflect the one-month cap.
• If you relied on larger deposits to cover risk, lean harder on tenant screening and consider a co-signer or higher-qualified applicants instead.
• Confirm whether you qualify for the small-landlord exception before charging more than one month.

As always, this is general orientation — verify the current statute or consult a California attorney before acting. See the full California investor guide for deposits, rent caps, and LLC steps.