California law limits you to asking a maximum of two months’ rent if the apartment is unfurnished. If the apartment is furnished, however, you can request up to three months’ rent. While there are certain security deposit rules that govern the state of California as a whole, the city or the city or county in which your rental property is located may have additional laws, so check to be sure you are acting within locally accepted protocols. Although California law limits the amount of security a landlord may request, it does not require landlords to hold renter security deposits in a separate bank account or to pay interest on such deposits.
Upon receiving security deposits, landlords may be able to keep all or a portion of a tenant’s security deposit at the time the tenant moves out due to costs incurred such as tenant default on rent payment(s) or debts incurred due to tenant lease violations. However, you cannot keep the deposit to cover costs such as ordinary wear and tear on the apartment or furnishings, or improvements on conditions that existed prior to the tenant’s move-in date.
Security deposit amounts owed to former tenants must be refunded within 21 days of the tenant move-out date. Under CAL. CIV. CODE § 1950.5: California Code – Section 1950.5, the landlord (or agent thereof) shall, upon the request of the tenant, make an initial inspection of the premises to allow the tenant an opportunity to correct identified deficiencies in order to avoid security deposit deductions no earlier than two weeks before the termination or end of lease date. However, if a tenant chooses not to request an initial inspection, the duties of the landlord to identify such deficiencies are discharged.