To be a landlord in California, you have to make the unit habitable and properly documented before anyone moves in, give a specific set of written disclosures at lease signing, follow strict caps on security deposits and rent increases, respect notice rules while the tenant lives there, and use the exact procedures the state prescribes for returning the deposit and ending the tenancy. The rules are detailed, and the penalties for skipping steps are real, so the work is front-loaded: get the setup right and the rest of the tenancy runs on the paperwork you already built.
Get the Unit Legally Rentable
California imposes an implied warranty of habitability on every residential rental. Under Civil Code Section 1941.1, the unit must have effective waterproofing, working plumbing and gas, hot and cold running water, functional heating and electrical systems, and a clean, sanitary environment free of pests and debris.1California Legislative Information. California Code Civil Code 1941.1 Roofs, exterior walls, windows, and doors must provide adequate weather protection. Rent out a unit that falls short and the tenant can withhold rent, repair and deduct, or bring code enforcement in.
Every unit needs working smoke alarms installed to current building standards, and you (not the tenant) are responsible for testing and maintaining them.2California Legislative Information. California Health and Safety Code 13113.7 Carbon monoxide detectors are required in any unit with a fossil fuel source or an attached garage, operable at move-in, with the landlord on the hook for reported problems.3California Legislative Information. California Health and Safety Code 17926.1
Many California cities also require a business license, rental permit, or unit registration before you legally rent out a property, and some run rental inspection programs. Fees vary. Check with the city or county clerk before you list the unit. Renting without required permits can bring fines and may weaken your ability to enforce lease terms or pursue an eviction later.
Written Disclosures You Have to Give
California requires a long list of written disclosures at or before lease signing. Miss one and you can create real liability, which is why a current California-specific lease package is worth the cost.
- For any property built before 1978, federal law requires you to disclose known lead hazards, hand over any inspection reports, and provide an EPA pamphlet. Noncompliance can trigger civil fines up to $10,000 per violation and liability for up to three times the tenant’s damages.4California Department of Public Health. Real Estate Disclosure and Notification
- Before any new tenancy, you must provide written information about bed bug identification, behavior, prevention and treatment, and how to report a suspected infestation.5California Department of Real Estate. Landlords and Tenants Rights Guide – Landlords Disclosures
- You are not required to disclose a death that occurred more than three years before the applicant’s offer to rent, but you cannot lie if directly asked.6California Legislative Information. California Civil Code 1710.2
- Other required disclosures cover known pest control treatments, toxic mold, proximity to a former military ordnance location, the Megan’s Law sex offender database, shared utility arrangements, the landlord’s contact information, and the property’s smoking policy.
Keep signed copies of everything. If a tenant later claims you failed to disclose, the burden of proving you did usually lands on you.
Screening Applicants Without Triggering Complaints
Federal law bars housing discrimination based on race, color, religion, national origin, sex, disability, and familial status.7U.S. Department of Housing and Urban Development. Housing Discrimination Under the Fair Housing Act California adds protections for age, ancestry, marital status, sexual orientation, gender identity, gender expression, genetic information, veteran or military status, and source of income under Government Code Section 12955.8California Legislative Information. California Government Code 12955
The source-of-income rule catches new landlords out. You cannot reject an applicant because they plan to pay with a Section 8 voucher or another government subsidy; voucher holders must be evaluated using the same criteria as everyone else.9Cornell Law Institute. California Code of Regulations Title 2 Section 12141 – Source of Income Discrimination in Housing
The practical rule is consistency. Collect the same information from every applicant, apply the same standards, and write down why you approved or rejected each one. You can request rental history, employment verification, credit reports, and references. California caps the screening fee at an amount adjusted annually for the Consumer Price Index, and you can only charge what the screening actually costs, up to that cap. Applicants can request an itemized receipt. Charging over the cap, or pocketing fees without running actual screening, invites penalties.
Security Deposit Limits
For most landlords, the maximum security deposit is one month’s rent. A narrow exception lets natural-person landlords, or LLCs whose members are all natural persons, who own no more than two residential rental properties totaling four or fewer units collect up to two months’ rent.10California Department of Justice. Know Your Rights as a California Tenant – Security Deposits
Permissible deductions cover unpaid rent, cleaning needed to restore the unit to its move-in condition (not ordinary wear and tear), and repair of damage the tenant caused beyond normal use. You cannot deduct for upgrades that go past restoring what was there.
Rent Caps and Just Cause
The Tenant Protection Act of 2019 (AB 1482) sets a statewide cap on annual rent increases for most residential properties: 5% plus the local CPI change, or 10% total, whichever is lower.11California Department of Justice. The Tenant Protection Act – Your Obligations as a Landlord or Property Manager The Act also requires just cause to evict a tenant who has lived in the unit for 12 months or more.12California Legislative Information. California Bill Text – AB 1482 Tenant Protection Act of 2019
Common exemptions include single-family homes if certain conditions and notices are met, housing built in the last 15 years, and units already covered by stricter local rent control. Cities including Los Angeles, San Francisco, and Oakland run their own rent stabilization ordinances with different caps and additional protections. If your property is in one of them, you follow both the local ordinance and the state Act, using whichever rule is stricter.
Running the Tenancy Day to Day
Late fees are governed by Civil Code Section 1671, which treats them as liquidated damages: enforceable only as a reasonable estimate of the actual cost a late payment causes you.13California Legislative Information. California Civil Code 1671 There is no statutory percentage cap, but courts routinely strike down fees they consider punitive. Fees at or below 5% of rent are generally upheld; fees above 8–10% are almost always voided. Daily compounding fees rarely survive challenge.
Entry Notice
You cannot enter a tenant’s unit at will. Civil Code Section 1954 requires at least 24 hours’ written notice before entering for non-emergency reasons like repairs, inspections, or showing the unit. The notice must state the date, approximate time, and purpose, and entry has to happen during normal business hours unless the tenant agrees otherwise.14California Legislative Information. California Civil Code 1954 – Entry of Dwelling Unit Genuine emergencies are the exception.
Repairs
Habitability is not a one-time move-in duty. It continues throughout the tenancy. A broken heater reported in January cannot still be broken in February. Delayed repairs give tenants legal grounds to withhold rent, and a code enforcement complaint can cost far more than the original fix.
Records
Keep organized files for each unit: the signed lease, all disclosure acknowledgments, rent payment records, maintenance requests and completion notes, and every written communication with the tenant. These records are what carry you through disputes, evictions, and deposit accounting.
Ending a Tenancy
Termination procedures are rigid. One misstep and you may have to start over, losing months.
For nonpayment of rent, serve a 3-day notice to pay or quit stating the exact amount owed and how the tenant can pay. The three days exclude Saturdays, Sundays, and judicial holidays.15California Legislative Information. California Code of Civil Procedure 1161 For a curable lease violation, serve a 3-day notice to cure or quit describing the problem. For a no-fault termination of a month-to-month tenancy, a 30-day written notice applies if the tenant has been there under a year, and 60 days if they have been there a year or more.16California Legislative Information. California Civil Code 1946.1
Where the Tenant Protection Act applies, you cannot simply decide you want a different tenant. At-fault reasons include nonpayment, lease breach, criminal activity on the premises, or refusing to sign a renewed lease with substantially similar terms. No-fault reasons include the owner moving in, removing the unit from the rental market, or a substantial remodel that requires vacating.
A no-fault eviction triggers a relocation assistance obligation. You must either pay the tenant one month’s rent as relocation within 15 calendar days of serving the notice, or waive rent for the tenancy’s final month. Fail to comply and the termination notice is void.17California Legislative Information. California Civil Code 1946.2 Some local ordinances stack additional relocation payments on top.
Service matters as much as content. Acceptable methods are personal delivery, substituted service on a person of suitable age at the property plus a mailed copy, or conspicuous posting at the property plus a mailed copy. Improper service is one of the most common reasons eviction cases get thrown out.
Returning the Deposit
Within 21 days after the tenant moves out, you must either return the full deposit or provide a written itemized statement explaining each deduction along with any remaining balance.10California Department of Justice. Know Your Rights as a California Tenant – Security Deposits The itemization has to be detailed enough for the tenant to see exactly what was charged and why.
AB 2801 layered photo requirements on top of that timeline. As of April 1, 2025, whenever you take deductions, you must photograph the unit after the tenant vacates but before any repairs or cleaning, and again after repairs or cleaning are done. For leases beginning on or after July 1, 2025, you must also photograph the unit at the start of the tenancy, before the tenant moves in.18California State Senate Judiciary Committee. AB 2801 Friedman – Senate Judiciary Committee Analysis When you deduct, deliver the photos with the written cost explanation — by mail, email, flash drive, or a link.
Failing to provide the required photos and itemized statement in bad faith forfeits your right to claim any portion of the deposit. Even without bad faith, a landlord who wrongfully withholds a deposit can face statutory damages of up to twice the deposit on top of what the tenant is actually owed.19California Legislative Information. California Civil Code 1950.5 Move-in documentation is where deductions are won or lost.
Taxes, Licensing, and Insurance
Rental income is taxable. You report it on Schedule E of your federal return, with deductible expenses including mortgage interest, property taxes, insurance, repairs, depreciation, and property management fees.20Franchise Tax Board. Rental Personal Income Types For California, rental income is classified as passive activity income. If you live out of state and own California rental property, the Franchise Tax Board requires whoever pays you rent (or your property manager) to withhold 7% of gross rental payments for state income tax, unless you obtain a waiver.21Franchise Tax Board. 2026 Instructions for Form 588 Nonresident Withholding Waiver Request Nonresidents owe California tax only on income from California property; residents owe California tax on rental income from properties anywhere.
Many cities also require a business tax certificate or rental business license, with fees that vary by municipality. Check with your local tax authority before collecting the first rent check.
California does not legally require landlords to carry insurance on a rental, but a mortgage lender almost certainly will, and even a paid-off property leaves you exposed to a tenant injury claim that can exceed the building’s value. A standard landlord policy covers the structure, liability, and lost rental income after a covered event. A homeowner’s policy is not the same product; tell your insurer the property is rented out.
Property Left Behind
If a tenant leaves belongings when they go, you cannot throw them out. Civil Code Sections 1980 through 1991 require a written notice to the former tenant describing the property, stating where it can be claimed, and setting a deadline at least 15 days after personal delivery or at least 18 days after mailing.22California Legislative Information. California Civil Code 1984 Property believed to be worth $700 or more must be sold at public auction after published notice, with net proceeds going to the county for the former tenant to claim for up to a year. Property worth less than $700 can be kept, sold, or disposed of without a public sale. Skip the process and you can be sued for the value of what was tossed.