Southern California Property Management

Deducting From a Tenant's Deposit

The number one reason landlords get sued in small claims court is mishandling the security deposit.

In California, Civil Code §1950.5 governs every step of the process from timelines to documentation to how much you can deduct. If you’re navigating this on your own, one mistake can cost you the entire deposit or up to three times the amount in penalties. Here's how to do it right.

• Step 1: Know the 21-Day Deadline

  Once a tenant moves out and you regain possession of the property, you have 21 calendar days to:

  • Return any unused portion of the security deposit
  • Send a complete itemized statement of any deductions

  This statement must include:

  • Receipts for any work performed
  • Contact information and address of any vendors used
  • A breakdown of what each charge is for

  If you miss the 21-day deadline, even by one day, the law says the tenant is entitled to a full refund of their deposit—regardless of the condition they left the property in. If the tenant sues you in small claims court, you could be liable for the full deposit plus up to three times that amount in damages and court costs.

• Step 2: Comply with AB 2801 – Photos Are Now Required

  As of April of 2025, AB 2801 added a new requirement: you must take and include photos with your deposit disposition.

  You are now required to:

  • Take photos immediately after move-out, before any cleaning or repairs are done
  • Take photos immediately after all cleaning and repairs are complete
  • Send these photos to the tenant along with the itemized statement and receipts

  These photos serve as objective documentation and protect both you and the tenant from disputes. If you fail to include them, the deductions you claim could be disallowed in court.

• Step 3: Provide Receipts and Contact Information for Vendors

  If you hired anyone to clean, repair, or perform maintenance on the property, you must provide:

  • A copy of each invoice
  • The name, address, and contact info of each vendor
  • A clear description of what service was performed

  If you did the work yourself, you can still deduct for it—but only at a reasonable hourly rate. Be prepared to explain how you calculated that rate.

• Step 4: Deduct Fairly and Within the Law

  You can only deduct from the security deposit for:

  • Unpaid rent
  • Damage beyond ordinary wear and tear
  • Cleaning needed to return the unit to its original condition (excluding normal use)

  You cannot deduct for:

  • Pre-existing damage
  • Normal wear and tear (such as light scuffs on paint or worn carpet)

  Be sure to reference your move-in and move-out inspections. These are essential to proving what damage occurred during the tenancy and what already existed beforehand. Without proper documentation, your deductions can be disputed or thrown out.

• Step 6: Watch Out for Utility Debts That Stay with the Property

  In most California cities, water and trash bills stay with the property, not the tenant. If the tenant leaves an unpaid balance, the utility provider will not allow you to start new service until the debt is paid. Always call the local water and sanitation companies before completing your deposit disposition to check for unpaid balances. Otherwise, you may refund the tenant and later find yourself paying their leftover bills out of pocket.

• Step 7: Mail It, Track It, and Keep Proof

  Even if the tenant doesn’t provide a forwarding address, you still need to mail the deposit accounting and any refund to the last known address, which is typically the rental property. If it gets returned, keep a copy of the unopened envelope. That shows you made a good faith effort to comply with the 21-day rule.

  Tenants are often very aware of this deadline. Some will deliberately wait to contact you until after the 21 d