AB12 - What Landlords Should Know

September 2, 2025

How much should I hold for a security deposit?

Security deposits help to provide property owners and real estate investors a financial safeguard against potential damages and unpaid rent to their rental unit.

What Changed Under Law AB12?

With the passage of Assembly Bill No. 12 (AB 12) the amount of money most California landlords can hold as security deposit for a residential rental property has been reduced.

Previous Law (before July 1, 2024)

California law limited a property owner to receiving a maximum of 2 months’ rent for an unfurnished residential property and a maximum of 3 months’ rent, in the case of a furnished residential property.

New Law (Effective July 1st, 2024)

The maximum amount most landlords can demand or receive for a residential security deposit is 1 months’ rent, regardless of whether the property is furnished or unfurnished.

Are There Exceptions?

Yes, but exceptions are limited to “small landlords” also known as “mom and pop landlords.”
Small landlords are defined as owners who:

• Own no more than two residential rental properties and
• Own collectively no more than four dwelling units
  If you meet these criteria, you can collect and hold up 2 months’ rent as a security deposit.

Important: This exception also does not apply if the prospective tenant is a “service member” as defined in Section 400 of the Military and Veterans Code.

Even if you believe you qualify as a small landlord, it’s essential to review the full legal criteria or consult a professional to avoid missteps.

What does this mean for landlords in the Los Angeles area?

With these reduced security deposits, owners are left with less financial security should there be an issue with their tenant or unit.

Silver Screen Properties recommends:

• Stricter tenant screening
• Comprehensive income verification and credit and background checks
• Strong lease agreements to for maximum protection

Stay Compliant – Partner with Silver Screen Properties!

At Silver Screen Properties, we specialize in helping Los Angeles landlords stay compliant with the evolving state and local rental laws – like AB 12 – while protecting your real estate investment. Whether you're managing a single unit in Los Feliz or a multi-building complex in North Hollywood, we’ll help you:

• Determine if you qualify as a “small landlord”
• Upgrade your tenant screening process
• Optimize your lease agreements to best protect you

Don’t leave compliance to chance!
Contact Silver Screen Properties today to schedule a free landlord compliance review to ensure your properties are operating in accordance with all state and local laws and see what our services can offer you.