Understanding Security Deposits

Security deposits are a key part of protecting your rental property, ensuring tenants uphold their lease obligations, and providing a financial cushion for potential damages or unpaid rent. At L2 Property Management, we follow all applicable California laws when collecting, holding, and returning security deposits — with transparency and fairness as our top priorities.

​What Is a Security Deposit?
A security deposit is a refundable amount of money collected at the beginning of a tenancy. It is held to cover:

1. Unpaid rent

2. Repair of damages beyond normal wear and tear

3. Cleaning costs to restore the unit to “rent ready” condition

4. Replacement of lost keys, garage remotes, or other items provided at move-in

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California Deposit Limits

As of July 1, 2024, the maximum allowable security deposit depends on the type of landlord:

• Individual landlords (natural persons):

  • Maximum = 1 month’s rent, regardless of whether the unit is furnished or unfurnished.

• Corporate landlords (LLCs, corporations, REITs):

  • Maximum = 2 months’ rent for an unfurnished unit

  • Maximum = 3 months’ rent for a furnished unit

These limits include any pet deposit or other upfront charge.
(Source: California Civil Code § 1950.5, updated by SB 644)

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How We Handle Deposits
At L2 Property Management, we:

1. Collect the deposit at lease signing and hold it in a separate trust account or forward to the owner to hold

2. Conduct detailed move-in and move-out inspections with photo documentation

3. Provide a clear itemized statement of any deductions, if applicable

4. Return the remaining deposit balance within 21 days of the tenant vacating the property, in compliance with California law

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What Counts as Wear & Tear vs. Damage?
We use industry standards and common-sense guidelines to distinguish between:

Normal Wear and Tear (not chargeable)

1. Minor carpet wear

2. Faded paint or minor scuffs

3. Loose door handles or sticking drawers

Tenant-Caused Damage (chargeable)

1. Large holes in walls

2. Pet stains or excessive dirt on carpet

3. Broken appliances due to misuse

4. Unauthorized paint or fixture changes

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Tips for Owners

1. Keep receipts for upgrades or repairs you may want reimbursed if caused by tenant damage

2. Avoid collecting excessive deposits — stay within legal limits

3. Understand that you must return deposits even if there’s a new tenant ready to move in

4. Document the condition of your unit thoroughly before and after each tenancy

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We take the guesswork out of the security deposit process. Our team handles inspections, documentation, accounting, and legal compliance — giving you peace of mind and protecting your investment.

Contact us today to learn more about how we manage security deposits professionally and in full compliance with California law.