Getting a Commercial Security Deposit Back in California: Civil Code 1950.7

How long does a commercial landlord have to return a security deposit in California?

Generally 30 days from the date the landlord receives possession of the premises (Civil Code section 1950.7(c)). The clock runs from when the landlord gets the space back, so the date you returned keys or surrendered possession is the one to document.

The statute sets three timelines depending on what the landlord is claiming and how big the deposit is:

Your lease may set an earlier date, so check its deposit clause.

What can a commercial landlord keep from the deposit?

Only amounts reasonably necessary to cover tenant defaults in paying rent, to repair damage to the premises caused by the tenant, or to clean the premises when the tenancy ends, and only if the deposit was made for any or all of those purposes (section 1950.7(c)).

• Check the lease's deposit clause. It defines what the deposit secures. Some leases also require restoration of alterations or removal of signage and fixtures at the end, which can affect what the landlord claims as damage.
• Check the surrender clause. It often describes the condition the space must be in at move-out, such as broom-clean.
• Damage means tenant-caused. Section 1950.7 refers to damage caused by the tenant. Conditions that existed before you moved in, or that the landlord was responsible for maintaining, are worth raising.
• Reasonable means reasonable. A $4,000 cleaning charge for a small office with photos showing clean floors invites a question.

The deposit is held for the tenant, and your claim to it comes before claims of the landlord's creditors, except a trustee in bankruptcy (section 1950.7(b)).

How commercial deposit rules differ from residential rules

If you have read about apartment deposits, adjust your expectations. The residential statute, Civil Code section 1950.5, is far more detailed and was amended several times between 2024 and 2026. Section 1950.7 was last amended in 2003 and remains short.

Because the statute does not list documents, your lease and your own evidence matter more. Ask for an accounting and invoices anyway, since the statute allows the landlord to keep only amounts reasonably necessary for the listed purposes.

Did SB 1103 change commercial deposit rules?

No. As of October 2026, section 1950.7 has not been amended since 2003. SB 1103, effective January 1, 2025, added protections for qualified commercial tenants (small businesses, small restaurants and small nonprofits) covering operating cost charges, rent increase notices, termination notices and lease translation, but it left the deposit statute alone.

If your dispute also involves CAM reconciliations or other lease charges, see our guide to a commercial lease dispute letter in California.

What if the landlord sold the building during your lease?

When the landlord's interest ends by sale, assignment or otherwise, the landlord must within a reasonable time either transfer the remaining deposit to the successor and notify you by personal delivery or certified mail of the transfer, any claims against it, and the new owner's name and address, or return the deposit to you (section 1950.7(d)). A successor that receives the deposit takes on the same obligations.

If you never got a transfer notice, your demand letter can go to both the old and new owners, asking each to confirm who holds the funds.

Example: applying the two-week and 30-day rules

Example (hypothetical): a boutique paid $5,000 a month in rent and a $10,000 deposit, with nothing labeled as last month's rent. The landlord receives possession on June 1. The tenant owes $1,500 in unpaid rent and nothing else.

• The claim is for rent only and the deposit is larger than one month's rent, so the two-week rule applies. After the $1,500 rent claim, $8,500 remains, and the part above one month's rent, $3,500, is due by June 15.
• The other $5,000 must be returned or accounted for by July 1, 30 days after possession.
• If the landlord instead claims $2,000 for repairs, the two-week rule no longer fits; the balance after lawful deductions is due within 30 days.

Steps for a commercial deposit demand letter

1. Confirm the date the landlord received possession, with key return records, emails or a signed surrender.
2. Pull the lease's deposit, surrender and notice clauses.
3. Gather move-in and move-out photos, the final rent ledger and any landlord statement.
4. Calculate what you believe is owed and the statutory deadline that applies.
5. Send the letter to the notice address in the lease, citing section 1950.7 and asking for payment or an accounting with invoices by a set date.
6. Mention that bad-faith retention can bring up to $200 in addition to actual damages.

If the landlord does not respond, small claims is one option: a business claimant is generally limited to $6,250 (Code of Civil Procedure section 116.220), and a natural person to $12,500 (section 116.221). Ask the court's small claims advisor which limit fits how your business is organized. Filing steps are covered in our small claims demand letter guide.

When an attorney-written commercial deposit letter makes sense

Commercial deposits can be large, and the $200 statutory penalty is modest, so the lease and the facts carry most of the weight. An attorney-written letter can help when the deposit is above the small claims limit, the lease has an attorney fee clause, the landlord is offsetting disputed charges, or the building changed hands.

At Talk to My Lawyer, a licensed California attorney writes your letter using the lease, your surrender records and photos, applies the section 1950.7 deadline that fits your deposit, and sends it on your behalf. If a lawsuit becomes likely, a lawyer can tell you which court and claims fit.