California Assembly Bill 12 (AB 12) was passed by the State Legislature and signed by Governor Newsom on October 11, 2023.
Currently, all California property owners are allowed to collect a maximum security deposit of two months’ rent for unfurnished units and three months’ rent for furnished units.
AB 12 amends California Civil Code Section 1950.5 to limit the maximum security deposit for a dwelling unit to one month's rent, regardless of whether the unit is furnished or unfurnished.
However, if the property owner is (1) a natural person or a limited liability corporation in which all members are natural persons and (2) owns no more than 2 residential rental properties that collectively include no more than 4 dwelling units offered for rent, the maximum security deposit max not exceed two months’ rent, regardless of whether the unit is furnished or unfurnished.
The changes apply to security deposits collected on or after July 1, 2024.
Click here to read the full text of the bill.