What New State Security Deposit Laws Mean for Renters

On September 21, 2026, Michigan Governor Gretchen Whitmer signed a bill that allows security deposits to be returned by direct deposit or other electronic transfer. It is the latest in a series of state deposit changes since 2024: California now caps most deposits at one month's rent and requires landlord photos, and Colorado has set its refund deadline at 30 days and widened what counts as wrongful withholding. For tenants, that means lower upfront costs in some states, faster refunds and more evidence in a dispute, provided they know their state's deadline and how to use it.

Key takeaways

• California caps most deposits collected from July 1, 2024 at one month's rent, on top of the first month's rent. Small landlords (individuals or all-individual LLCs with no more than two properties and four units for rent) may ask for two months, except from service members.
• California landlords must photograph the unit at move-in for tenancies starting on or after July 1, 2025, and before and after any repair or cleaning they charge for. They have 21 days after move-out to refund with an itemized statement.
• Since January 1, 2026, Colorado landlords have 30 days to refund (up to 60 if the lease says so). Keeping 125% or more of actual damages is presumed bad faith, and ignoring a seven-day written demand can cost them three times the amount wrongfully kept.
• Bad-faith withholding in California can add statutory damages of up to twice the deposit: on an illustrative $2,400 deposit with $900 kept, up to $5,700 in total.
• Deposit-replacement fees and surety bonds are usually nonrefundable and generally leave you owing for damage and unpaid rent.

What it means for you

• California tenants: the cap applies if your deposit was collected on or after July 1, 2024; landlord move-in photos are required if your tenancy began on or after July 1, 2025. See the California section.
• Tenants in other states with recent changes: Colorado, Michigan, Maryland and New York (rent-stabilized units) changed their rules in 2024–2026; see the state table.
• Moving out now: request a pre-move-out inspection where offered, photograph everything and send your forwarding address in writing. The worked example shows what to do if money goes missing.
• Signing a new lease: compare the deposit with your state's cap; in California, most "move-in fees" count toward it.
• Offered a "deposit alternative": check what you would still owe at move-out; see the deposit alternatives section.

This page is general education, not legal advice. For a dispute involving significant money, a local legal aid office or tenant union can review your lease.

What changed, state by state

Deposit changes confirmed in statute text or official legislative pages as of October 14, 2026:

Older rules still decide many disputes. Under New York General Obligations Law 7-108, a landlord who misses the 14-day itemized statement forfeits any right to keep part of the deposit. In Washington, a landlord that collects a deposit without giving you a written move-in condition checklist is liable for the full deposit under RCW 59.18.260.

California: cap, photos, 21 days

California's rules sit in Civil Code section 1950.5.

What counts toward the cap

"Security" covers any payment, fee or charge imposed at the start of a tenancy, including advance rent and new-tenant processing fees; a lawful screening fee is separate. On a $2,400 rent, a capped landlord can collect at most $4,800 before move-in: first month plus a $2,400 deposit. Before July 1, 2024, the same unit could carry a $4,800 deposit unfurnished or $7,200 furnished.

A qualifying small landlord can still ask for a $4,800 deposit, for $7,200 in total. The cap also doesn't stop a landlord from accepting at least six months' rent in advance on a lease of six months or longer. Deposits collected before July 1, 2024 are unaffected, and no lease may call a deposit "nonrefundable."

Photos and the 21-day deadline

For tenancies beginning on or after July 1, 2025, the landlord must photograph the unit at the start. Since April 1, 2025, it must also photograph the unit after you leave but before any repair or cleaning it will charge for, and again afterward. If your tenancy began earlier, your own photos may be the only move-in record.

The statement and refund are due within 21 calendar days after you move out. If repair and cleaning deductions exceed $125, the statement must come with receipts or invoices (or, for the landlord's own work, the time spent and hourly rate) and those photos. At $125 or less, or if you signed a waiver at or after notice to end the tenancy (or within 60 days before a fixed-term lease expires), you can still request them within 14 days of receiving the statement, and the landlord then has 14 days to send them.

The pre-move-out inspection

Once either side gives notice, the landlord must tell you in writing that you can request an initial inspection, held no earlier than two weeks before you leave. It lists proposed deductions, and you can fix them. Items visible then but not listed generally can't be deducted later, unless your belongings kept the landlord from seeing them or the damage happened after the inspection.

Wear and tear versus damage

California, Colorado, New York and Washington all bar deductions for ordinary wear and tear. California limits charges to the reasonable cost of restoring move-in condition and bars professional cleaning charges unless reasonably necessary to get there.

Colorado's 2026 law is the most specific. Wear and tear means deterioration from ordinary use without negligence, accident or abuse, but excludes a unit left substantially less clean than at move-in.

Under the Colorado law, whole-unit carpet replacement can be charged only for substantial, irreparable damage, and carpet older than 10 years can't qualify; whole-unit repainting requires substantial damage throughout. Lease clauses charging tenants for wear and tear are void. Washington similarly limits charges to the damaged portion of an item, under RCW 59.18.280.

On September 24, 2024, the FTC announced a $48 million settlement with Invitation Homes. The agency alleged that the company charged renters for normal wear and tear and pre-existing damage, and returned 39.2% of deposit dollars collected in 2020–2022 against a national average of 63.9%. These were the FTC's allegations, resolved by a proposed settlement order that needed a federal judge's approval.

When a refund is short or late

Illustrative example. A California tenant rents from a large management company at $2,400 a month, so the deposit is capped at $2,400. The tenancy began in August 2025. On day 21 after move-out, $1,500 arrives with no itemized statement, receipts or photos.

Withheld (W)              = $2,400 - $1,500 = $900
Statutory damages, max    = 2 x $2,400 deposit = $4,800
Maximum claim, bad faith  = W + statutory = $900 + $4,800 = $5,700

W is the actual loss; the $4,800 is a ceiling a judge may award only on a finding of bad faith, and a landlord that skips the itemization rules in bad faith also loses any right to keep part of the deposit. Without bad faith, the claim is the $900 less any damage the landlord proves, and it carries the burden of showing its charges were reasonable. Even $5,700 fits California's small claims limit of $12,500 for individuals; the filing fee is $30 to $100 and lawyers can't appear for either side, according to the California Courts self-help guide.

The same $900 in Colorado could bring $2,700 (treble) plus attorney fees and costs, but only after a written demand announcing your intent to sue goes unpaid for seven days. Maryland allows up to three times the withheld amount plus reasonable attorney's fees if the landlord kept it without a reasonable basis, under Real Property section 8-203; New York allows punitive damages of up to twice the deposit for willful violations.

The steps in order

1. Mark the deadline: 21 days in California, 14 in New York, 30 in Washington, 30 in Colorado (up to 60 if your lease sets a longer period), 45 in Maryland.
2. Send a dated demand letter by email and tracked mail: amount, statute, missed deadline or disputed items, photos, a payment date and notice that you will file in small claims. California's court site calls asking for payment a step you must take before filing, unless a restraining order exists or asking would be dangerous.
3. If unpaid, file in small claims and bring the lease, payment proof, photos, any statement received and the demand letter.

Deposit alternatives and surety

Some landlords offer a monthly fee or surety bond instead of a cash deposit. These lower move-in cash but protect the landlord, not you: the fee generally doesn't come back, and you can still owe for damage or unpaid rent, sometimes to the company that paid the landlord. A few states regulate them:

• Florida (section 83.491): the fee is optional, you can switch to a deposit at any time, and the disclosure must say it doesn't relieve you of rent or damage obligations. An insurer can seek reimbursement from you within one year, with the defenses you'd have against the landlord.
• Maryland (section 8-203): a landlord can't require you to buy a surety bond, and before you do, the surety must disclose in writing that the payment is nonrefundable, the bond is not insurance for you and you may have to reimburse the surety.
• Maine (14 M.R.S. section 6039): a landlord may offer but not require a bond, and the bond plus any deposit can't exceed two months' rent.

Washington tenants have another route: under RCW 59.18.610, a written request lets you pay deposits and move-in fees in three monthly installments on a lease of three months or more, at no extra charge, unless deposits and fees total no more than 25% of the first month's rent and no last month's rent is required.

Frequently asked questions

Must a California landlord refund part of a pre-cap deposit?

No. The cap does not apply to security collected or demanded before July 1, 2024, so a larger deposit paid earlier can stay.

Can a landlord add a pet deposit to a one-month deposit?

Not in Maryland: the state's housing department says a pet deposit is allowed only if the total stays within one month's rent, though monthly pet rent is not banned. California's cap applies to security "however denominated," so a separately labeled deposit generally counts toward the limit.

How is a shared deposit refunded to roommates in California?

Under the 2026 rules, by one check payable to all adult tenants on the lease, unless the landlord and every adult tenant sign a written agreement on how it is split or paid. That agreement can direct electronic deposits to each tenant. One exception: if a tenant ended the lease early under Civil Code section 1946.7, which covers victims of domestic violence, sexual assault, stalking and certain other crimes, and asks for a different method, the landlord may use it.

What happens to the deposit if the building is sold?

In California, the seller must transfer the remaining deposit to the buyer and notify you, or return it with an accounting; otherwise the buyer can be jointly liable unless it reasonably and in good faith believed the deposit was handled. Colorado requires whoever holds the deposit to transfer or return it within 60 days.

Is a forwarding address required to get the refund?

Neither California's nor Colorado's statute requires one, but it decides where the refund goes. California landlords send mailings to the address the tenant provides, or to the vacated unit if none is given, unless the refund goes back electronically. Colorado landlords comply by sending the statement to the last-known address or an email address they know of, and the payment by mail or, with the tenant's consent, by secure electronic transfer.

Checklist for move-in and move-out

1. Move-in: photograph and video every room on day one, and keep a signed condition checklist (required in Washington; New York landlords must offer a joint inspection).
2. Keep the lease and payment records showing which amount was rent and which was deposit.
3. At notice: request a pre-move-out inspection in writing where available (California, Colorado, New York) and fix what it lists.
4. Move-out day: clean to move-in condition, repeat the photos from the same angles, return keys and send your forwarding address and refund method in writing.
5. Afterward: count the days to your state's deadline, check deductions against your photos and send a demand letter before filing.

Sources

• California Civil Code section 1950.5
• California AB 12 (2023), bill record
• California AB 2801 (2024), bill record
• California AB 414 (2025), bill record
• California Courts: Small claims in California
• California Courts: Write a demand letter
• Colorado HB25-1249, Session Laws 2025, chapter 401
• Office of the Governor of Michigan: bill signing, September 21, 2026
• WWMT: New state renter protections in Michigan
• New York General Obligations Law 7-108
• New York Senate Bill S952-B (2025)
• Maryland DHCD: Renters' Rights and Stabilization Act FAQ
• Maryland Real Property section 8-203
• Washington RCW 59.18.260
• Washington RCW 59.18.280
• Washington RCW 59.18.610
• Florida Statutes section 83.491 (2025)
• Maine 14 M.R.S. section 6039
• FTC: Action against Invitation Homes (September 24, 2024)