California Security Deposit Laws 2025: What Riverside Rental Property Investors Must Know

By Brian Bean, Dream Big Property Management

If you’re charging outgoing residents for repairs on your Riverside rental property, you better make sure you’re following California’s new laws — or you could be in serious legal trouble.

As a rental home advocate serving the Inland Empire, I’m seeing too many property investors get caught off-guard by recent changes to California’s security deposit regulations. Two major pieces of legislation — Assembly Bill 12 and Assembly Bill 2801 — have fundamentally changed how we handle security deposits.

Let me walk you through everything you need to know to stay compliant and protect your investment.

The New One-Month Security Deposit Cap (AB 12)

As of July 1, 2024, most California rental home investors can charge no more than one month’s rent for security deposits, whether the unit is furnished or unfurnished.

Small Investor Exception

There’s good news for smaller investors: If your property is held in your name or family trust (not a corporation or LLC) and you own no more than two properties with four units or fewer total, you may be able to charge up to two months’ rent. (Check your local ordinances for guidance on your property.)

Important Reminder

All deposits count toward the total cap — security deposit, pet deposit, key deposit, etc. The combined total of all deposits cannot exceed the legal limit.

Game-Changing Photo Requirements (AB 2801)

Here’s where things get serious. Under Assembly Bill 2801, rental home investors must now provide photographic evidence for any security deposit deduction.

Critical Timeline

• As of April 1, 2025: Owners or property managers must take time-stamped move-out photos BEFORE repairs are completed.
• Starting July 1, 2025: Owners or property managers must take time-stamped move-in photos for all NEW tenancies.

Required Documentation

To make any deduction from a resident’s security deposit, you must provide:

• Time-stamped photos showing damage
• Time-stamped photos from before move-in
• Time-stamped photos after repairs are completed
• Paid receipts for repairs actually performed
• Written itemized statement with all photos attached

Bottom line: After July 1, 2025, if you don’t have these items, you cannot charge the resident—period.

Understanding Normal Wear and Tear vs. Damage

Not all bumps and scrapes justify a security deposit deduction. Here’s what you need to know:

Normal Wear and Tear (Property Owner’s Responsibility)

• Minor scuff marks on walls
• Faded paint after years of occupancy
• Small nail or tack holes
• Carpet wear from normal use
• Fixtures that have worn out from age

Damage Beyond Normal Use (Possibly the Resident’s Responsibility)

• Large holes in walls
• Broken fixtures from misuse
• Carpet burns, tears, or excessive stains

Prorated Charges Apply

For some items, you can only charge residents a prorated amount:

• Carpet: With an 8- to 10-year useful life, damages can only be assessed for the portion of useful life left. For example, for damage to 4-year-old carpet, you might be able to charge the resident for half the replacement cost.
• Interior paint: 3-5 year useful life. Repainting after that normal lifespan is the property owner’s cost. Excessive wall repairs before painting might be a resident charge.

Your New Move-In Process (Starting July 1, 2025)

For all new tenancies beginning July 1, 2025, you must perform a full inspection with high-resolution, time-stamped photos of:

• Every room, floor to ceiling
• All appliances and fixtures
• Full exterior and landscaping
• Any existing wear or damage

Store these photos with your notes and get signed acknowledgment from your residents.

Your Move-Out Process (Effective Now)

Follow these five steps:

1. Take photos immediately after move-out, BEFORE any cleaning or repairs
2. Complete required repairs and cleaning
3. Take “after” photos of completed work
4. Compare before-and-after photos and document any resident damage
5. Send itemized statement with all photos to residents within 21 days

New Cleaning Fee Restrictions

You can no longer charge a flat fee for professional carpet cleaning or other professional services, “just because.” You can only charge for the actual cost of cleaning if it’s “reasonably necessary” to return the unit to its original condition — and you must have before-and-after photos to prove it.

Essential Compliance Tips

Pre-Moveout Inspections

When a notice to vacate is given, you must offer residents a pre-moveout inspection. The purpose is to let them know what issues to address before moveout.

We also recommend you send them a copy of your pre-move-in inspection and photos along with a cleaning checklist.

Legal Requirements for Holding Deposits

Remember, security deposits belong to your residents, not you. They must be treated as fully refundable unless the resident leaves unpaid rent or legally allowable deductible damage.

Property managers must hold deposits in a special Client Trust bank account. Self-managing investors should consult with an attorney to ensure compliance with state requirements.

In all cases, if you place security deposit funds in an interest-bearing account, you must account for and credit that interest to the resident. The interest is not yours to keep.

You have no more than 21 calendar days after moveout to return remaining funds and provide an itemized statement of any deductions.

Don’t Get Caught Unprepared

These new laws represent a significant shift in how security deposits are managed in California. The photo documentation requirements, in particular, add a new layer of responsibility that could result in serious legal consequences if ignored.

As rental home advocates, we believe in doing things the right way — not just because it’s the law, but because it creates better outcomes for everyone involved.

Good communication and proper documentation prevent disputes and protect your investment while ensuring fair treatment for residents.

Get Your Free Compliance Checklist

Want our complete Security Deposit Compliance Checklist with photo templates and timeline reminders? Contact us at DreamBigPM.com.

Remember: Don’t be accidental about your future—be intentional.

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Brian Bean is the founder of Dream Big Property Management, serving rental property investors throughout Riverside County and the Inland Empire. With more than 25 years of real estate experience, Brian’s mission is to “Educate, Equip and Encourage Others” in building wealth through rental property investing. Contact Dream Big Property Management at 951-314-5402 or visit https://DreamBigPM.com.

 

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