Multiple Choice Question: What is the maximum security deposit that a residential landlord can generally collect upfront for a lease or month-to-month rental agreement for a term of 30 days or more? Pick the best answer:

A. The dollar equivalent of one month of rent.
B. The dollar equivalent of one month of rent, plus a pet deposit.
C. The dollar equivalent of 2 months of rent.
D. The dollar equivalent of one month of rent, plus at least 6 months of rental payments. 

Answer: Answer A is the correct answer, and Answers C and D are possible exceptions to the general rule. A residential landlord can generally collect a security deposit equal to one month of rent (plus an application screening fee). It does not matter if the property is furnished or unfurnished. For example, if the rent is $5,000 per month, the landlord can generally collect upfront a maximum of $10,000 to cover the first month’s rent of $5,000/month, plus a $5,000 security deposit.

The one-month max is a new law that came into effect on July 1, 2024. It does not apply to landlords who already collected security deposits before July 1, 2024.

Answer B is wrong. A security deposit generally includes any advance payment, fee, deposit, or charge, “however denominated.” A landlord cannot circumvent the one-month max requirement by simply labeling funds collected upfront as a pet deposit, cleaning fee, last month’s rent, or something else.

So in the above example, if the landlord of the $5,000/month rental wants to charge a $1,000 pet deposit, the landlord can do that. But the landlord would only be able to collect a maximum of $4,000 as a security deposit, plus the $1,000 pet deposit. That said, landlords are usually better off not separating out a pet deposit from the security deposit.

Answer C is a possible exception to the general rule. Certain small-time landlords can collect a security deposit up to 2 months’ rent (furnished or unfurnished), but only 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.

In June 2024, C.A.R. revised its standard-form Residential Lease or Month-to-Month Rental Agreement (RLMM) to reflect the new security deposit law. C.A.R. also drafted a new standard-form Security Deposit Disclosure and Addendum (SDDA) to be used for small-time landlords, and active military service members, when applicable.

Answer D is another possible exception. Regardless of the maximum amount for a security deposit, a landlord for a lease with a lease term that is at least 6 months long, can collect a minimum of 6 months of rent upfront. For example, if it’s a 12-month lease, can the landlord collect 3 months of rent upfront? The answer is “no.” The minimum amount of rent that the landlord must collect upfront to fall under this exception is 6 months of rent.

Source: The full text of this law is set forth at section 1950.5(c) of the California Civil Code, available at the California Legislative Information website.

-Thank you to Marilyn Simon (Pasadena Manager) for suggesting this week’s legal tip!

Copyright© 2025 Shared Success Center, LLC (serving HomeServices of America companies). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of February 3, 2025. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals. Written by Stella Ling, Esq.