California Real Estate Practice Exam

What is the maximum security deposit that commercial property owners may require according to California law?

1. One month's rent

2. Two month's rent

3. Three month's rent

4. There is no maximum

The correct answer is: There is no maximum

According to California law, there is no maximum security deposit that commercial property owners can require. This means that they are allowed to ask for any amount of security deposit as long as it is agreed upon by both parties. This sets it apart from residential properties, where landlords are limited to requesting no more than two month's rent for an unfurnished unit and three month's rent for a furnished unit. The reasoning behind this is that commercial properties generally have higher rental rates and longer lease terms, so the landlord may need a larger security deposit to protect their investment. Options A, B, and C are incorrect because they are the maximum security deposit amounts allowed for residential properties in California. It's important for commercial tenants to carefully review their lease agreement and negotiate the security deposit amount if needed.