April 3, 2026

By Miles Williams, Broker/Owner, Real Property Management Southland

Last Updated: April 2026 | DRE #01968830 | Reading Time: 18 minutes

Security deposit disputes are one of the most common reasons California landlords end up in small claims court. In Long Beach alone, I see property owners make the same mistakes year after year: deducting for normal wear and tear, missing the 21-day deadline, or not documenting the property condition at move-in.

With AB 414 taking effect on January 1, 2026, the rules have changed again. If your tenants in Downey, Lakewood, or anywhere across Southeast LA County paid their deposit electronically, you now have new obligations for how you return that money. And if you are still collecting deposits the way you did three years ago, you may already be out of compliance with the 2026 California landlord-tenant law changes.

After 11 years of managing more than 730 properties across Long Beach and surrounding cities, I have seen what happens when landlords handle deposits incorrectly. Penalties. Lawsuits. Tenants awarded damages. This guide covers everything you need to stay compliant and protect your investment property.

California Security Deposit Limits Under AB 12

Before we get into the new 2026 changes, let’s make sure you understand the current deposit limits. This is where many Long Beach landlords still get confused.

Assembly Bill 12 (AB 12) took effect on July 1, 2024, and it fundamentally changed how much you can collect. Under the previous law, California landlords could charge up to two months’ rent for unfurnished units and three months’ rent for furnished units. That is no longer the case.

Current Deposit Limits (2026)

This law applies to leases signed on or after July 1, 2024. If you have an existing tenant in Belmont Heights or Signal Hill who signed their lease before that date with a higher deposit, you can keep the current deposit amount until the lease renews. But any new lease or renewal agreement must comply with the one-month limit.

For landlords who manage their own properties across Cerritos, Torrance, or Bellflower, this change reduces the financial cushion you have if a tenant causes significant damage. That is one of the reasons we started offering deposit alternatives, which I will cover later in this guide.

AB 414: New Electronic Deposit Return Rules for 2026

New Law – Effective Jan 1, 2026

Assembly Bill 414 is the biggest change to California security deposit procedures in years. Here is what it means for landlords in Long Beach and throughout Los Angeles County.

The Core Rule

If your tenant paid their security deposit or rent electronically at any point during the tenancy, you must offer to return the deposit electronically. This includes payments made through online portals, ACH transfers, Zelle, Venmo, or any other electronic method.

At RPM Southland, most of our tenants across Long Beach, Downey, and Lakewood pay through our online owner and tenant portals. That means the vast majority of our deposit returns now default to electronic refunds.

What Counts as “Electronic Payment”

• Online tenant portals (like the ones we use at RPM Southland)
• ACH bank transfers
• Digital payment apps (Zelle, Venmo, PayPal)
• Debit card payments
• Wire transfers

If the tenant paid everything by paper check or cash and never made a single electronic payment, you can still return the deposit by paper check. But honestly, across our 730+ properties, that scenario is increasingly rare.

Written Consent for Paper Check Returns

If a tenant paid electronically but you and the tenant both prefer a paper check, you can still do it. However, you need a written agreement. This can be signed at any point during the tenancy, including as a lease addendum.

Electronic Delivery of Itemized Statements

AB 414 also allows landlords to send the itemized deduction statement via email, provided both parties have a written agreement authorizing electronic delivery. This consent can be included in the original lease or added as an addendum at any time during the tenancy.

The 21-Day Security Deposit Return Timeline

This has not changed under AB 414, but it is the single most common compliance failure I see from DIY landlords across Long Beach and Southeast LA County.

Under California Civil Code Section 1950.5, you have 21 calendar days from the date the tenant vacates (not the lease end date) to do one of two things:

1. Return the full security deposit, or
2. Return any remaining deposit balance along with an itemized written statement explaining every deduction

What the Itemized Statement Must Include

The 21-Day Timeline in Practice

At RPM Southland, we build this timeline into our standard move-out procedure for every property we manage across Long Beach, Downey, Lakewood, and Torrance. There is no scrambling at the last minute because the process is systematized.

Allowable Deductions and Common Mistakes Landlords Make

This is where most deposit disputes originate. Understanding the difference between allowable deductions and normal wear and tear is critical for any landlord in Long Beach or the surrounding cities.

What You Can Deduct

The Most Common Deduction Mistakes

After 11 years of managing properties across Long Beach, I have seen landlords make the same errors repeatedly. Here are the ones that lead to small claims court:

1. Deducting for carpet replacement after 8+ years. California does not have a legally defined carpet lifespan, but courts generally consider 8-10 years the expected useful life. If the carpet was already 9 years old, you cannot charge a departing tenant in your Lakewood rental for full replacement.
2. Deducting for painting after 2+ years. Courts typically view repainting after two or more years of occupancy as the landlord’s responsibility, not the tenant’s, unless there is actual damage like large holes or unauthorized colors.
3. Vague deduction descriptions. Writing “cleaning: $500” without specifying what was cleaned will not hold up. You need “deep cleaning of kitchen including grease removal from range hood, degreasing oven interior, and scrubbing tile grout: $350” with an invoice to match.
4. Charging retail rates for DIY repairs. If you did the work yourself on your Bellflower rental, you can charge a reasonable hourly rate for your labor, but you cannot charge what a contractor would have billed.
5. Not accounting for depreciation. A 5-year-old refrigerator that gets damaged is not worth what a new one costs. Deductions must reflect the depreciated value of the item, not the replacement cost.

Move-In and Move-Out Inspections

Documentation is the single biggest factor in whether your deductions will survive a dispute. Without a thorough move-in inspection, you have no baseline to prove what damage the tenant caused versus what existed before they moved into your Long Beach property.

Move-In Inspection Best Practices

• Photograph every room from multiple angles, including inside closets, cabinets, and appliances
• Video walk-through with date stamp and narration of existing conditions
• Document pre-existing damage in writing on a move-in condition report signed by both parties
• Test all appliances, fixtures, and systems and note anything that is not fully functional
• Record utility meter readings at the time of move-in

How RPM Southland Handles Inspections

Property evaluations happen about every six to eight months at RPM Southland. We walk into the property, take pictures in every room, and look for lease violations and deferred maintenance issues. This is not just about protecting the owner’s investment in neighborhoods like East Long Beach or North Long Beach. It is about catching small problems before they become expensive ones.

At move-out, we do a detailed comparison of the current condition against the move-in photos and our periodic inspection records. That documentation trail is what protects you if a tenant disputes deductions on your Downey or Cerritos rental.

Pre-Move-Out Inspection (Tenant’s Right)

California law gives tenants the right to request an initial move-out inspection before their tenancy ends. During this inspection, you walk the property with the tenant and identify any items that could result in deductions. The tenant then has the opportunity to fix those issues before the final inspection.

Multiple-Tenant Refund Rules

If your Long Beach rental has a lease with two or more adult tenants, the deposit return process has specific rules that many landlords overlook.

Default Rule Under AB 414

Starting January 1, 2026, landlords must return the security deposit balance via a single payment made to all adult tenants on the lease. If you are issuing a check, it must be made payable to all tenants named on the lease. If returning electronically, a single payment goes to one designated account.

The Written Agreement Exception

If tenants want the deposit returned to a specific individual or a specific account, they must provide written authorization. This is important for roommate situations, which are common in Long Beach neighborhoods like Belmont Shore and Alamitos Beach where shared rentals are popular.

This is one of the more complicated areas of deposit management, and it is a frequent source of confusion for landlords who self-manage properties in areas with high roommate turnover.

Obligo: The Deposit-Free Alternative for Long Beach Landlords

With the deposit cap now limited to one month’s rent under AB 12, many Long Beach landlords are looking for additional protection. That is where Obligo comes in.

Obligo allows tenants to pay a small fee in lieu of a traditional security deposit. It might be anywhere from $200 to $500, and that makes it much easier for a tenant to move in instead of coming up with a full $4,000 security deposit. The tenant provides a billing authorization, and if there are damages at move-out, the landlord files a claim with Obligo directly.

How It Works at RPM Southland

1. Tenant qualifies through Obligo’s screening: The platform runs a credit-based assessment to determine eligibility.
2. Tenant pays a small fee: Typically $200 to $500, significantly less than a full month’s rent deposit.
3. Move-in proceeds normally: The lease, move-in inspection, and all other processes remain the same.
4. At move-out, if damages exist: We file a claim with Obligo. They pay us, and the tenant repays Obligo on a payment plan if needed.

Benefits for Property Owners

• Faster leasing: Lower move-in costs attract more qualified applicants to your Long Beach, Torrance, or Whittier rental
• No escrow headaches: You do not need to hold deposits in a separate account or track interest obligations
• Reduced vacancy time: Tenants who cannot scrape together a full deposit can move in sooner
• Claims process is straightforward: Documentation from our inspections supports the claim

How RPM Southland Handles Security Deposits

Here is exactly what happens when you turn your deposit management over to our team. This applies whether your property is in Long Beach, Downey, Lakewood, Cerritos, San Pedro, or any of the 18+ cities we serve.

At Move-In

• We collect the security deposit through our online portal (creating the electronic payment record required under AB 414)
• We conduct a comprehensive move-in inspection with photos of every room, closet, and appliance
• The tenant signs a move-in condition report acknowledging the property’s current state
• All documentation is stored in the property owner’s portal for 24/7 access

During the Tenancy

• Property evaluations every six to eight months with photos and maintenance notes
• Any lease violations are documented and addressed immediately
• Maintenance issues are tracked with work orders and vendor invoices

At Move-Out

• We offer the pre-move-out inspection as required by law
• We conduct the final inspection and compare against the move-in photos
• We obtain repair estimates or completed invoices from our vetted vendor network
• We prepare the itemized deduction statement with specific descriptions and dollar amounts
• We return the deposit electronically within the 21-day window, per AB 414
• All records are archived in the owner portal

The entire process is systematized. No guesswork, no missed deadlines, no compliance gaps. That is what 730+ properties and 11 years of doing this will produce.

Frequently Asked Questions

Quick Reference: Security Deposit Cheat Sheet for Long Beach Landlords

Miles Williams

Broker/Owner, Real Property Management Southland

Miles Williams founded Real Property Management Southland in 2014 while completing a Master’s program at Cal State Long Beach. With over 11 years of local property management experience managing 730+ residential properties, Miles and his team serve Long Beach, Downey, Lakewood, Torrance, Cerritos, and 13+ additional Southeast LA County communities. California Real Estate Broker, DRE #01968830.

Phone: (562) 270-1777 |
Office: 3450 E Spring St #209, Long Beach, CA 90806 |
Web: rpmsouthland.com