Fact Pattern: You are a lease listing agent for a residential property using C.A.R.’s Lease Listing Agreement. The landlord insists on collecting 2 months of rent as a security deposit.

Yet, as of July 1, 2024, the maximum security deposit for a new residential lease is generally limited to only one month of rent (furnished or unfurnished). However, an exception allowing 2 months is available if all 3 of the following requirements are met: (1) The landlord is a natural person; an LLC in which all members/owners are natural persons; or a family trust as defined; (2) The landlord owns no more than 2 residential rental properties with a collective total of no more than 4 dwelling units offered for rent; and (3) The tenant is not an active military service member.

Multiple Choice Question: Are you, as the listing agent, obligated to confirm that the landlord meets the 3 requirements to fall under the 2-month exception? Pick the best answer:

A. Yes.
B. Yes, if the landlord delegates that responsibility to you.
C. No.
D. It depends. 

Answer: Answer A is generally wrong. C.A.R.’s Lease Listing Agreement ( LL) specifically states that it’s up to the landlord, not you, to determine “what price and terms to list or rent the Premises” (see paragraph 12C).

Answer B is also wrong. The landlord can try to delegate that responsibility to you, but it will only be effective if you give your written consent. The LL specifically says that the agreement cannot be “amended, modified, altered or changed except in writing” (see paragraph 20). Of course, you should never accept that responsibility, because figuring out whether the 3 requirements are met is likely to involve a legal determination, and as a real estate agent, you are not allowed to make any legal determinations.

Answer C is the correct answer. The C.A.R. Residential Lease Agreement (RLMM) provides that the maximum amount of security deposit is the dollar equivalent of one month of rent, unless an exception applies (see paragraph 4A). The RLMM then references C.A.R.’s standard-form Security Deposit Disclosure and Addendum (Form SDDA).

In turn, the SDDA requires the landlord (not you) to make an affirmative representation that the landlord meets requirements #1 and #2 of the 3 requirements (see paragraph 4 of the SDDA). As for requirement #3, the SDDA requires the tenant (not you) to affirm that the tenant is an active military service member if applicable (see paragraph 5 of the SDDA).

If you have a discussion with the landlord about the maximum security deposit, it is a great idea to follow that up in writing. You want to explain to the landlord in writing that, under the SDDA, it’s up to the landlord (not you) to affirmatively represent whether the landlord falls under the 2-month exception. You also want to encourage the landlord to consult with the landlord’s own attorney as the landlord deems appropriate. Be sure to also get in writing the landlord’s acknowledgment of receipt of your advice.

-Thank you to Janien Canel (Calabasas Office) 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 May 12, 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.