California rental laws are changing—again. And if you're a landlord in Tracy or anywhere in the Golden State, you need to be ready.
The security deposit process, in particular, is getting a major facelift starting in 2025. With AB 2801 taking effect, landlords can no longer operate under assumptions or outdated routines when handling a tenant’s security deposit.
This guide walks you through the key changes, what they mean for your rental properties, and how to stay on the right side of California law.
Major Updates to the Security Deposit Process for California Landlords in 2025
AB 2801 clarifies one important message: a tenant’s security deposit is not your renovation budget. Starting July 1, 2025, the law now clearly states that deductions must only cover what’s reasonably necessary to restore the unit to its original condition, excluding normal wear and tear.
This shift prevents landlords from using deposits to upgrade or improve their rental units. If the item wasn’t damaged beyond what’s considered “ordinary use,” you can’t deduct it.
AB 2801: What California Landlords Must Know
The amended law introduces stricter regulations on how and when landlords can deduct from a tenant’s security deposit.
Here’s what’s new:
- Only reasonable, necessary costs can be deducted.
- Professional cleaning charges can’t be automatically applied unless the cleaning restores the unit to its original condition, beyond ordinary wear.
- A higher deposit for service members must come with written justification and conditions for a partial refund after six months.
Action Plan: Many landlords must revise their internal checklists, lease agreements, and standard operating procedures.
A. Normal Wear and Tear vs. Damage: What Counts Now?
Understanding the line between regular use and real damage is crucial. Under California Civil Code Section 1950.5, landlords are still allowed to make deductions, but only if those deductions are legitimate.
Let’s break it down:
- Normal wear (not deductible): Light scratches on flooring, small nail holes, worn carpet in high-traffic areas.
- Actual damage (deductible): Broken tiles, large stains, pet damage, unauthorized paint jobs.
The keyword is reasonable. Landlords must prove that the deductions exceed the ordinary deterioration expected during the tenancy.
B. Carpet Cleaning and Professional Services: What’s Still Legal?
Before AB 2801, many landlords included professional cleaning services as a standard deduction. However, that is no longer allowed unless you can show that it was necessary to restore the carpet to its original condition at move-in. If the carpet is showing normal wear and tear, landlords must follow the California Civil Code Section.
To comply with the new law:
- Only charge for professional cleaning fees if the service is tied to actual damage or excessive filth.
- No more blanket clauses in lease agreements automatically charge tenants for carpet or deep cleaning, regardless of condition.
This reinforces the importance of documentation, which brings us to the next significant shift.
C. Mandatory Photo Documentation: Here’s the Deal
Photos are legally required. Under AB 2801, starting July 1, 2025, landlords must provide visual proof when making any deductions.
Here's the new photo documentation timeline:
- Before the tenancy begins: Take photos of the unit’s condition, including existing ordinary wear and tear.
- At move-out: Take photos before any cleaning or repairs begin.
- After repairs/cleaning: Retake photos to show the finished results.
If you're deducting from the deposit, you must include these photos with the itemized statement. You can share them via mail, email, USB drive, or a secure online link. The point is transparency, and it’s now legally required.
D. Itemized Statements and Refund Deadlines
This part of the law hasn’t changed much, but it's now more enforceable. If you make deductions, you still need to:
- Provide a written itemized statement within 21 days of the tenant moving out.
- Clearly explain each deduction.
- Include supporting documentation and the required photos.
If you fail to meet these obligations, you could face penalties, including being taken to small claims court. And yes, tenants are more aware of their rights than ever.
Key Requirements Every California Landlord Should Follow
To stay compliant with the new security deposit law, property owners must:
- Update rental agreements, initial inspection, and move-in/move-out checklists.
- Include photo documentation procedures in your standard processes.
- Stop using automatic cleaning charges in leases.
- Prepare to provide more transparency to tenants via mail or digital access.
These changes apply to furnished and unfurnished units. They’re designed to protect tenants while holding landlords to higher standards.
Special Rules for Military Service Members
AB 2801 also includes specific protections for tenants serving in the military.
Here’s what landlords need to do starting April 1, 2025:
- If you charge a higher deposit due to credit-related concerns, you must give the service member a written explanation before the lease is signed.
- If the tenant pays rent on time for six months, that additional deposit must be refunded.
- The refund timeline needs to be clearly outlined in the lease agreement.
Comply with California’s New Deposit Rules with Expert Property Management
Let’s be real—keeping up with new rental laws in California isn’t exactly a walk in the park. AB 2801 adds many new steps to how landlords handle security deposits, and missing one could cost you. That’s why teaming up with a local expert like HBR Rentals makes sense. We know the rules inside and out and are here to help you stay on track without the headache.
We’re based in Tracy, CA, and we keep things simple. We handle the parts of property management that eat up your time or trip you up. Things like:
- Taking move-in and move-out photos (with time stamps)
- Prepping lease agreements that follow the latest laws
- Breaking down deposit deductions with clear records
- Screening tenants and managing applications
- Staying ahead of law changes so you don’t have to
Have questions about how these changes impact your rental property? Contact HBR Rentals today, your go-to partner for professional property management in Tracy, CA.
Let’s take the guesswork out of compliance and make 2025 your best year!
FAQs about AB 2801
Does AB 2801 apply to all landlords, regardless of the number of properties they own?
Yes, AB 2801 applies to all landlords, but certain provisions, such as those related to military service members, have specific criteria. For instance, landlords who own no more than two residential rental properties with a total of four or fewer units are subject to particular requirements when renting to military tenants.
Are landlords required to offer tenants the option to report positive rental payments to credit agencies under AB 2801?
While AB 2801 focuses on security deposit rules, other legislation, such as AB 2747, mandates that landlords offer tenants the option to have their positive rental payment information reported to at least one nationwide consumer reporting agency. This offer must be made at the time of the lease agreement and at least once annually thereafter for leases entered into on or after April 1, 2025.
How should landlords handle security deposit deductions for furnished rentals under AB 2801?
AB 2801 requires landlords to provide photographic evidence and detailed itemizations for any deductions from a tenant's security deposit, regardless of whether the rental is furnished or unfurnished. This means that for furnished rentals, landlords must document the condition of both the property and its furnishings at the start and end of the tenancy to justify any deductions. This approach ensures transparency and helps prevent disputes over the security deposit.
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