California has rolled out a major change that every rental property owner needs to understand and it’s already reshaping how Sacramento landlords prepare their properties, screen tenants, and structure their leases. Assembly Bill 12 (AB 12) dramatically reduces the maximum security deposit that most landlords can charge beginning July 1, 2024, and the ripple effects are significant. This is one of the most important updates for anyone involved in Sacramento Property Management.
What AB 12 Changes
Under AB 12, landlords may now collect only one month’s rent as a security deposit across nearly all rental types. This applies to both furnished and unfurnished rentals.
Old Rule:
Up to two months deposit for unfurnished
Up to three months for furnished
New Rule (AB 12):
Maximum one month deposit for all rentals
Applies to security deposit, cleaning deposit, pet deposit, key deposit, and any refundable deposit
There is no legal workaround by renaming the deposit. If it’s refundable, it counts toward the one-month cap.
Are There Any Exceptions?
Yes — but only one meaningful exception:
Small “Mom-and-Pop” Landlords May Charge Two Months
To qualify:
The owner must own no more than two residential rental properties,
The owner must own no more than four total units combined,
AND the tenants cannot be receiving a government subsidy, such as Section 8.
This eliminates the exception for most professional operations, LLCs, investors, and anyone managing multiple rentals. The majority of rental owners using Sacramento Property Management services will fall under the one-month cap.
How AB 12 Impacts Sacramento Landlords
This law will create challenges but also opportunities for property owners.
1. Higher Risk at Move-Out
With only one month of deposit available, landlords will have:
Less financial coverage for damages
Less protection for high-turnover tenants
A higher likelihood of out-of-pocket expenses during turnover
This makes tenant screening more important than ever.
2. A Greater Need for Strong Move-In Inspections
Documenting the move-in condition is no longer optional; it is absolutely essential.
PMI American River already provides:
Time-stamped move-in photos
Detailed reports
High-resolution photo documentation
This level of documentation protects owners from disputes especially now that deposits can no longer serve as a buffer.
3. More Owners Are Choosing Landlord Protection Insurance Programs
Because deposit amounts are lower, professional coverage matters more.
Surevestor landlord protection can offer protection against malicious property damage:
Malicious tenant damage is covered
Owners aren’t financially exposed
Claims are processed quickly
This is becoming a key differentiator in Sacramento Property Management.
4. Stronger Lease Enforcement Is Now Mandatory
With less money held in deposit:
Late fees must be enforced consistently
Unauthorized occupants must be addressed early
Pet violations need immediate follow-up
Safety issues must be documented right away
Practical Steps Owners Should Take Now
To protect themselves under AB 12, landlords should:
✔ Strengthen screening criteria
Focus on credit, income, rental history, and behavior patterns.
✔ Require renters insurance and liability coverage
This replaces some of the protection lost with the reduced deposit.
✔ Complete professional annual inspections
Catch small issues before they become expensive.
✔ Use a professional Sacramento Property Management company
This is where PMI American River shines with compliance, screening, recordkeeping, and enforcement that keeps owners fully protected under new laws.
Final Thoughts
AB 12 is one of the most impactful rental laws California has introduced in years. While it may feel restrictive at first, landlords who adapt early will be in the strongest position. Lower deposits mean that risk management, documentation, and enforcement must be airtight and that’s exactly what we provide for our clients every day.
