Cal. Codes » Civil Code / DIVISION 3. OBLIGATIONS / PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS / TITLE 5. HIRING / CHAPTER 2. Hiring of Real Property
California Codes

Cal. Civil Code § 1950.7 (2026)

Hiring of Real Property

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(a)Any payment or deposit of money the primary function of which is to secure the performance of a rental agreement for other than residential property or any part of the agreement, other than a payment or deposit, including an advance payment of rent, made to secure the execution of a rental agreement, shall be governed by the provisions of this section. With respect to residential property, the provisions of Section 1950.5 shall prevail.

(b)The payment or deposit of money shall be held by the landlord for the tenant who is party to the agreement. The claim of a tenant to the payment or deposit shall be prior to the claim of any creditor of the landlord, except a trustee in bankruptcy.

(c)The landlord may claim of the payment or deposit only those amounts as are reasonably necessary to remedy tenant defaults in the payment of rent, to repair damages to the premises caused by the tenant, or to clean the premises upon termination of the tenancy, if the payment or deposit is made for any or all of those specific purposes.

(1)If the claim of the landlord upon the payment or deposit is only for defaults in the payment of rent and the security deposit equals no more than one month’s rent plus a deposit amount clearly described as the payment of the last month’s rent, then any remaining portion of the payment or deposit shall be returned to the tenant at a time as may be mutually agreed upon by landlord and tenant, but in no event later than 30 days from the date the landlord receives possession of the premises.

(2)If the claim of the landlord upon the payment or deposit is only for defaults in the payment of rent and the security deposit exceeds the amount of one month’s rent plus a deposit amount clearly described as the payment of the last month’s rent, then any remaining portion of the payment or deposit in excess of an amount equal to one month’s rent shall be returned to the tenant no later than two weeks after the date the landlord receives possession of the premises, with the remainder to be returned or accounted for within 30 days from the date the landlord receives possession of the premises.

(3)If the claim of the landlord upon the payment or deposit includes amounts reasonably necessary to repair damages to the premises caused by the tenant or to clean the premises, then any remaining portion of the payment or deposit shall be returned to the tenant at a time as may be mutually agreed upon by landlord and tenant, but in no event later than 30 days from the date the landlord receives possession of the premises.

(d)Upon termination of the landlord’s interest in the unit in question, whether by sale, assignment, death, appointment of receiver or otherwise, the landlord or the landlord’s agent shall, within a reasonable time, do one of the following acts, either of which shall relieve the landlord of further liability with respect to the payment or deposit:

(1)Transfer the portion of the payment or deposit remaining after any lawful deductions made under subdivision (c) to the landlord’s successor in interest, and thereafter notify the tenant by personal delivery or certified mail of the transfer, of any claims made against the payment or deposit, and of the transferee’s name and address. If the notice to the tenant is made by personal delivery, the tenant shall acknowledge receipt of the notice and sign his or her name on the landlord’s copy of the notice.

(2)Return the portion of the payment or deposit remaining after any lawful deductions made under subdivision (c) to the tenant.

(e)Upon receipt of any portion of the payment or deposit under paragraph (1) of subdivision (d), the transferee shall have all of the rights and obligations of a landlord holding the payment or deposit with respect to the payment or deposit.

(f)The bad faith retention by a landlord or transferee of a payment or deposit or any portion thereof, in violation of this section, may subject the landlord or the transferee to damages not to exceed two hundred dollars ($200), in addition to any actual damages.

(g)This section is declarative of existing law and therefore operative as to all tenancies, leases, or rental agreements for other than residential property created or renewed on or after January 1, 1971.

Notes of Decisions
Cited in 9 cases (1 in the last 5 years), 1980–2025 · leading case: Schulman v. Vera, 108 Cal. App. 3d 552 (Cal. Ct. App. 1980).
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Schulman v. Vera, 108 Cal. App. 3d 552 (Cal. Ct. App. 1980). · cites it 2× “Civil Code section 1950.7 provides for the return by the lessor to the lessee of “[a]ny payment or deposit of money the primary function of which is to secure the performance of a rental agreement for other than residential property or any part of such agreement, other than a…”
In Re Stand. Furniture Co., 3 B.R. 527 (Bankr. S.D. Cal. 1980). “See also Cal.Civ.Code § 1950.7(c) (West). Norwood has not shown how he was damaged and he cannot therefore retain the benefit of the deposit.”
Pub. Employees' Ret. Sys. v. Winston, 209 Cal. App. 3d 205 (Cal. Ct. App. 1989). “Further, Civil Code section 1950.7 was not then in effect, and the decision did not involve the application of any statutory law governing security deposits.”
In Re Cassil, 37 Cal. App. 4th 1081 (Cal. Ct. App. 1995). “We agree that there were statutorily mandated duties in terms of the security deposits (Civ. Code, § 1950.7), as well as obligations owed under the trust deed.”
In re Art & Architecture Books of the 21st Century, 518 B.R. 43 (Bankr. C.D. Cal. 2014). “1 of the Lease demonstrates that Debtor as the tenant under the Lease had the rights to redeem by order or judgment of any court or by any legal process or writ its right of occupancy of the premises after termination of the Lease, including without limitation, any rights under…”
Aljabban v. Fontana Indoor Swap Meet, 54 Cal. App. 5th 482 (Cal. Ct. App. 2020). · cites it 4× “FISM Was Not Entitled Under the Terms of the Parties’ Agreement to Use the Security Deposit to Repair Damage to the Premises, and Aljabban Should Accordingly Recover on His Causes of Action for Breach of Contract and Conversion Civil Code section 1950.7, subdivision (c), which…”
Aljabban v. Fontana Indoor Swap Meet, Inc., No. D076214 (Cal. Ct. App. Sept. 10, 2020). · cites it 4× “FISM Was Not Entitled Under the Terms of the Parties’ Agreement to Use the Security Deposit to Repair Damage to the Premises, and Aljabban Should Accordingly Recover on His Causes of Action for Breach of Contract and Conversion Civil Code section 1950.7, subdivision (c), which…”
Hasson Inv. v. Sunset Blvd. Props., No. B330413 (Cal. Ct. App. July 23, 2025). · cites it 4× “(Civ. Code, § 1950.7, subd. (a) [“Any payment or deposit of money the primary function of which is to secure the performance of a rental agreement .”
Cassil v. Superior Court, 37 Cal. App. 4th 1081 (Cal. Ct. App. 1995). “We agree that there were statutorily mandated duties in terms of the security deposits (Civ. Code, § 1950.7), as well as obligations owed under the trust deed.”
Cal. Civil Code § 1950.7(c): 1 case
In Re Stand. Furniture Co., 3 B.R. 527 (Bankr. S.D. Cal. 1980). “See also Cal.Civ.Code § 1950.7(c) (West). Norwood has not shown how he was damaged and he cannot therefore retain the benefit of the deposit.”
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