Under California law, a landlord can only deduct from a security deposit for unpaid rent, cleaning needed to return the unit to its move-in condition, repairing damage beyond normal wear and tear, and, if the lease allows it, restoring or replacing furniture or other items. The landlord has 21 days after move-out to return the deposit or send an itemized statement explaining every deduction. Those rules just got a lot of attention here in San Diego.
What happened? Times of San Diego reported on October 20 that Essex, one of California's largest apartment landlords, agreed to pay $19.25 million to settle a class action filed in San Diego County by former tenants who said their deposits were wrongly withheld. According to internal company documents cited in the story, Essex owns 47,874 apartments in California, including 5,311 in San Diego County. The complaint alleged the company charged tenants using internal purchase orders instead of the third-party invoices state law requires. Essex denies any wrongdoing. Class counsel says the proposed settlement, valued at about $27.95 million including $8.7 million in debt forgiveness, goes to the court for preliminary approval on November 13, 2026.
What paperwork does a landlord owe you? If deductions for repairs and cleaning add up to more than $125, the itemized statement has to include copies of the bills, invoices, or receipts. If the landlord or an employee did the work, the statement must describe it, the time spent, and a reasonable hourly rate. For tenancies that began on or after July 1, 2025, landlords must photograph the unit at move-in, and since April 1, 2025, they must take photos after move-out before repairs or cleaning and again afterward. A lease also cannot label any part of a deposit as nonrefundable.
How much can a landlord collect up front? For most landlords, security is capped at one month's rent for deposits collected on or after July 1, 2024. Certain small landlords who own no more than two rental properties with no more than four units total can collect up to two months.
How do renters protect their deposit? Ask for the pre-move-out inspection the law allows, which can happen up to two weeks before you leave, so you can fix issues first. Take your own photos at move-in and move-out. If a landlord keeps a deposit in bad faith, a court can award up to twice the deposit in damages, and the California Courts note small claims cases can go up to $12,500.
Why do I care so much? Because every dollar of a returned deposit can go toward a down payment, and I want more San Diegans making the jump to ownership. And for my investor clients, clear photos and real receipts are simply good business. They protect you, keep turnovers smooth, and build trust with great residents. This is general information, not legal advice, so talk with a qualified attorney about your situation. Whether you are renting now or adding a rental to your portfolio, I'm your realtor, let me know when you need me.
Quick answers
How long does a California landlord have to return a deposit? 21 calendar days after the tenant moves out.
Can a landlord charge for normal wear and tear? No. Deductions are limited to damage beyond normal wear and tear, cleaning to move-in condition, unpaid rent, and items the lease covers.
When are receipts required? When repair and cleaning deductions total more than $125.
What is the deposit limit? Generally one month's rent, or two months for certain small landlords.
Read the original article: https://timesofsandiego.com/housing/2026/10/20/one-of-san-diegos-largest-landlords-settles-security-deposit-lawsuit-for-19-25-million/
Sources
California Legislative Information, Civil Code Section 1950.5
California Courts Self-Help Guide, Guide to security deposits in California
Image credit: Roman Eugeniusz via Wikimedia Commons, CC BY-SA 3.0