California Court Voids a $1,000 Lease Cap on a Tenant's Court Costs

A California appeals court held on November 2, 2026 that a residential lease cannot cap a prevailing tenant's litigation costs at $1,000. The same published opinion left the cap intact as to attorney fees, because the lease itself was the only source of any fee right.

Information last verified on November 5, 2026. This is a developing story; we update it as the record changes.

Jurisdiction scope: This article covers California residential tenancies only. Civil Code sections 1950.5 and 1953 are California statutes, and Aviles v. Shenon is a decision of a California intermediate appellate court. Deposit deadlines, penalties and rules on lease waivers differ in every other state.

What Happened

The California Court of Appeal, Second Appellate District, Division One, filed Aviles v. Shenon on November 2, 2026 in consolidated case nos. B342634 and B344966, on appeal from Los Angeles County Superior Court case No. 23STCV08686, Judge Barbara Ann Meiers. Presiding Justice Rothschild wrote the opinion, with Justices Weingart and M. Kim concurring. A jury found that landlords Yury and Natela Shenon violated Civil Code section 1950.5 by neither returning tenant Lee Aviles's $19,500 security deposit nor providing an accounting, found that they acted in bad faith, and awarded $19,500 in compensatory damages. The trial court then imposed a $39,000 statutory penalty, and judgment was entered for $61,801.67, comprised of that penalty and $22,801.67 in compensatory damages, which is the jury's $19,500 with interest. The Court of Appeal affirmed that judgment. It reversed the order capping Aviles's recoverable costs at $1,000 and provisionally reversed the order denying his attorney fee motion, holding that Civil Code section 1953 voids the lease's $1,000 cap as applied to costs but not as applied to fees.

The tenancy and the deposit

According to the opinion, Aviles leased a Los Angeles home the Shenons own for $9,750 per month, exercised an option to extend at $10,043 per month, and moved out in November 2022. The lease required a $19,500 security deposit. The opinion states that the parties do not dispute the Shenons never returned it.

The opinion recounts that Yury Shenon texted Aviles on November 29, 2022 that he had "identified many areas of the damage throughout the house" and was gathering repair quotes, then texted on December 17, 2022 and January 19, 2023 that he was still waiting on estimates. A written list of ten claimed defects did not reach Aviles's counsel until March 10, 2023, the day after a formal demand letter, and it attached no documentation of repairs or cost. Aviles sued in April 2023. After a week-long jury trial the jury found for Aviles on his claims and against the Shenons on their cross-complaint.

The lease provision at the center of the appeal

The Shenons drafted the lease on a California Association of Realtors form that contained this clause, which the opinion calls the fees and costs provision:

"In any action or proceeding arising out of this agreement, the prevailing party between landlord and tenant shall be entitled to reasonable attorney fees and costs, collectively not to exceed $1,000 (or $ _________)."

Source: Aviles v. Shenon (Nov. 2, 2026, B342634, B344966) Cal.App.5th, slip opn. at p. 11, California Courts, https://www.courts.ca.gov/opinions/documents/B342634.PDF

Aviles filed a memorandum seeking $24,773.27 in litigation costs, which the trial court taxed down to the $1,000 ceiling, and a separate motion for $136,896.50 in attorney fees, which the trial court denied on the ground that the provision "was and is valid."

What the Court of Appeal decided

On costs, the court held the clause void. It reasoned that Civil Code section 1953, subdivision (a)(4) deems void any residential lease provision by which a tenant agrees to modify or waive "procedural rights in litigation," and that the prevailing party cost right in Code of Civil Procedure section 1032, subdivision (b) is procedural. The court drew on the substance-versus-procedure test in Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co. (2010) 559 U.S. 393 and on federal diversity practice treating cost recovery as procedural, and concluded:

"Considering all of the above, we conclude Code of Civil Procedure section 1032, subdivision (b) reflects a procedural right. Accordingly, section 1953 prohibits a tenant like Aviles from limiting that right in a residential lease agreement. The fees and costs provision is void to the extent it does so."

Source: Aviles v. Shenon (Nov. 2, 2026, B342634, B344966) Cal.App.5th, slip opn. at p. 21, California Courts, https://www.courts.ca.gov/opinions/documents/B342634.PDF

On attorney fees the court went the other way. It noted that costs under section 1032 do not include attorney fees unless a fee award is separately authorized by contract, statute or law, and that California's default rule under Code of Civil Procedure section 1021 is that each side pays its own lawyer. The opinion observes that "[n]o statute or other law provides for the recovery of attorney fees here," and that while other tenant protection statutes such as Civil Code sections 1942.5 and 1947.11 do provide fees, section 1950.5 does not. Because the lease clause was the only fee right Aviles identified, the court reasoned that as to fees the clause creates a right rather than waiving one, so section 1953 does not reach it. For the same reason the court declined to take up Aviles's unconscionability argument: striking the clause would leave him with no fee entitlement at all.

The disposition reverses the cost order and directs the trial court to reconsider the motion to tax costs in light of the opinion. It provisionally reverses the fee denial, directing that the trial court consider the fee motion only if the costs it awards come to less than $1,000, and that the combined total of costs and fees awarded may not exceed $1,000. The parties bear their own costs on appeal.

Which parts are precedent, and which are not

The opinion's certification footnote states that it is certified for partial publication "with the exception of parts A through E of the Facts and Procedural Background and part A of the Discussion." Discussion part A is the entire portion addressing the Shenons' appeal from the judgment, including the bad faith questions. That means the jury-versus-judge discussion, the substantial evidence discussion and the setoff discussion are all unpublished.

California Rules of Court, rule 8.1110(c) provides that for citation purposes "the published part of the opinion is treated as a published opinion and the unpublished part as an unpublished opinion," and rule 8.1115(a) provides that an uncertified opinion "must not be cited or relied on by a court or a party in any other action," subject to narrow exceptions for law of the case, res judicata, collateral estoppel and certain criminal or disciplinary matters. So the section 1953 cost holding is citable California authority; the bad faith discussion is not.

It is also worth reading the unpublished bad faith portion precisely. The court did not hold that a jury may decide bad faith under section 1950.5. It wrote that, assuming without deciding that permitting the jury to decide the issue was error, the error did not prejudice the Shenons, because the trial court expressly stated it would have found bad faith and explained reasoning that "did not depend on any jury findings." The question the landlords raised was therefore left open rather than resolved.

A procedural note on timing: under California Rules of Court, rule 8.264(b)(1), a Court of Appeal decision in a civil appeal is generally final in that court 30 days after filing, and under rule 8.500(e)(1) a petition for review must be filed within 10 days after that. As of November 5, 2026 the opinion is three days old, so the finality and review windows remain open.

What the Law Actually Says

Civil Code section 1950.5: deadline, itemization and the bad faith penalty

Section 1950.5 governs security on residential rental agreements. Subdivision (e)(1) lets a landlord claim from the security "only those amounts as are reasonably necessary" for the purposes listed in subdivision (b), and subdivision (e)(2)(A) provides that "[t]he landlord shall not assert a claim against the tenant or the security for damages to the premises or any defective conditions that preexisted the tenancy . . . or for the cumulative effects of ordinary wear and tear occurring during any one or more tenancies."

Subdivision (h)(1) sets the deadline. No later than 21 calendar days after the tenant has vacated, the landlord must furnish the tenant a copy of an itemized statement indicating the basis for and the amount of any security received and its disposition, and must return any remaining portion. Subdivision (h)(2) requires the landlord to send, with the itemized statement, copies of bills, invoices or receipts for the work and materials deducted, plus photographs taken under subdivision (g); subdivision (h)(4)(A) excuses that documentation where deductions for repairs and cleaning together do not exceed $125. Subdivision (h)(3) allows a good faith estimate where a repair cannot reasonably be finished or the paperwork has not arrived within 21 days, with the real documents to follow within 14 calendar days.

Two enforcement provisions matter here. Subdivision (h)(7) states that a landlord "shall not be entitled to claim any amount of the security if the landlord, in bad faith, fails to comply with this subdivision." Subdivision (m) provides that bad faith claim or retention of the security "may subject the landlord or the landlord's successors in interest to statutory damages of up to twice the amount of the security, in addition to actual damages," adds that the court "may award damages for bad faith whenever the facts warrant that award, regardless of whether the injured party has specifically requested relief," and places the burden of proof on the landlord as to the reasonableness of the amounts claimed. Subdivision (o) allows an action under the section to be brought in small claims court when the damages claimed fall within the jurisdictional limits of Code of Civil Procedure sections 116.220 or 116.221.

Deposit size is a separate question that has changed since this lease. Subdivision (c)(1) now caps security at one month's rent, with a two month allowance in subdivision (c)(5) for a landlord who is a natural person or an all-natural-person LLC owning no more than two residential rental properties totaling no more than four rented units. Subdivision (c)(6) states that the subdivision "shall not apply to a security collected or demanded by the landlord before July 1, 2024," so the current one month cap does not reach a deposit taken, as this one was, years earlier. The opinion does not address what deposit cap applied when this tenancy began. Our guide to California's deposit, notice and entry rules tracks the current figures.

Civil Code section 1953: what a residential lease cannot make a tenant give up

Section 1953, subdivision (a) declares void as contrary to public policy any provision of a lease or rental agreement of a dwelling by which the tenant agrees to modify or waive certain rights. The enumerated list includes the tenant's "rights or remedies under Section 1950.5 or 1954" in paragraph (1), the right to assert a future cause of action in paragraph (2), the right to a notice or hearing required by law in paragraph (3), and, in paragraph (4), the tenant's "procedural rights in litigation in any action involving his rights and obligations as a tenant." Subdivision (c) limits the section to leases and rental agreements executed on or after January 1, 1976.

Code of Civil Procedure section 1032(b): costs as a matter of right

Section 1032, subdivision (b) reads: "Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding." Subdivision (a)(4) defines "prevailing party" to include the party with a net monetary recovery. Recoverable costs are itemized separately in Code of Civil Procedure section 1033.5, which treats attorney fees as a cost item only when fees are authorized by contract, statute or law. Rules on filing fees, deadlines and recoverable costs vary widely by state; our state-by-state landlord and tenant guide and our breakdown of small claims limits and fees in each state set out those differences.

Analysis: Why This Matters

The following is analysis from the Recording Law Editorial Team.

The published holding is narrow in form and consequential in effect. It does not change what a landlord owes a tenant under section 1950.5, and it does not create any new remedy. What it addresses is a clause the Shenons took from a California Association of Realtors form lease, and what it says is that one half of that clause cannot operate against a residential tenant in California.

The asymmetry the court drew is the heart of the opinion, and it follows from where the right comes from. Section 1953 voids a lease term by which a tenant "agrees to modify or waive" an existing right. A tenant who prevails already holds the section 1032, subdivision (b) cost right by operation of statute, so a lease clause shrinking that right to $1,000 is a waiver and is void. A tenant has no background right to attorney fees, because Code of Civil Procedure section 1021 leaves fees to agreement and section 1950.5 does not provide them. Against that baseline of zero, the same clause is not a waiver at all; it is a grant, capped. The court put the point plainly in holding that, as to fees, the provision creates a right rather than abridging one. It also contrasted section 1950.5, which says nothing about attorney fees, with tenant protection statutes that do provide them, citing Civil Code section 1942.5, subdivision (i) and section 1947.11, subdivision (a).

That reasoning carries a practical sting that the disposition makes visible. Because the clause caps costs and fees "collectively," and because the court preserved the clause as the sole source of fee rights, the trial court may consider fees only if the costs it awards come to less than $1,000, and only up to that combined ceiling. A tenant who recovers substantial costs therefore recovers nothing in fees under this clause. Aviles asked for $24,773.27 in costs and $136,896.50 in fees. The published holding removes the ceiling from the first number, and under the disposition the second is reachable only if the cost award comes in under $1,000. Readers should note that what happens next on remand is for the trial court; the Court of Appeal directed reconsideration rather than fixing an amount.

Two limits deserve emphasis. First, this is a decision of a California intermediate appellate court, not of the California Supreme Court. Second, the court itself flagged, in a footnote, that whether section 1953 voids a lessee's agreement to waive or modify the section 1032, subdivision (b) cost right "is an issue currently before the California Supreme Court" in Gogal v. Deng, S292779. The Supreme Court's own civil issues list, as of October 30, 2026, states the granted issues as whether parties to a pre-litigation contract are prohibited from waiving prevailing party cost rights, and whether Civil Code section 1953 voids a lessee's agreement to waive or modify that right. We are not going to guess at an outcome or a timetable. The published holding also leans on Gogal affirmatively, concluding that section 1953 is the type of tenant protection statute the Gogal parties had failed to identify, and that it interacts with section 1032, subdivision (b) in precisely the way Gogal intimated such a provision would. Because review was granted, the Gogal decision itself carries no binding or precedential effect, so the supporting authority is under review along with the question. We note only that the governing authority on this precise question is unsettled at the state's highest court, and that this is a developing matter we will track.

Finally, the publication line is doing real work here, and it is easy to misreport. The bad faith holdings, which are the parts most likely to be summarized as a win for tenants on the jury question, are unpublished and cannot be cited. The court did not decide whether section 1950.5 commits the bad faith determination to the judge or the jury. It assumed error and found it harmless on this record.

How This Affects You

For California residential tenants and landlords, the published holding speaks to a single clause type rather than to the underlying deposit rules. A residential lease provision that caps the tenant's recoverable costs is, under this decision, void as to costs. The decision does not disturb the deposit duties in section 1950.5, the 21-day itemization deadline, or the bad faith exposure in subdivisions (h)(7) and (m).

For anyone reading a California form lease, the opinion is a reminder that a clause can be partly enforceable and partly void, and that which half survives can depend entirely on whether the clause is cutting down a right the law already gave or handing over a right the law never gave. The opinion also shows the limits of a cap that is written to apply to costs and fees "collectively": once the cost side is unbounded, the combined ceiling can consume the fee side.

For people following California appellate law generally, the practical point is to check the publication line and the docket before relying on anything. A partially published opinion carries two different citation statuses inside one document, and a Court of Appeal decision can still be modified or reheard during the finality window set by rule 8.264(b)(1).

This article describes a published appellate holding and the text of three statutes. It does not evaluate any individual deposit dispute, and nothing here indicates how any particular case would come out.

This is general legal information, not legal advice. It describes a published appellate holding and the text of California statutes as of November 5, 2026. It is not a statement about any individual deposit dispute, and it does not predict any outcome. For advice about a specific situation, consult a licensed California attorney.

Related articles

• California landlord-tenant rules on deposits, notice and entry
• Our state-by-state landlord and tenant guide
• Small claims court limits, fees and appeals by state

Last updated: 2026-11-05. This is a developing story; details verified as of 2026-11-05.

Frequently Asked Questions

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

Civil Code section 1950.5, subdivision (h)(1) requires the landlord, no later than 21 calendar days after the tenant has vacated the premises, to furnish the tenant a copy of an itemized statement indicating the basis for and the amount of any security received and its disposition, and to return any remaining portion of the security. Subdivision (h)(2) requires copies of bills, invoices or receipts for deducted work and materials to be sent with that statement, and subdivision (h)(4)(A) excuses that documentation where deductions for repairs and cleaning together do not exceed $125.

What is the penalty if a California landlord keeps a deposit in bad faith?

Civil Code section 1950.5, subdivision (m) provides that bad faith claim or retention of the security may subject the landlord to statutory damages of up to twice the amount of the security, in addition to actual damages, and states that the court may award damages for bad faith whenever the facts warrant the award, regardless of whether the injured party specifically requested relief. Subdivision (h)(7) separately provides that a landlord who in bad faith fails to comply with subdivision (h) is not entitled to claim any amount of the security. The statute sets a ceiling, not a guaranteed amount.

Can a California residential lease limit what a tenant recovers in costs?

In the published portion of Aviles v. Shenon, filed November 2, 2026, the Second District Court of Appeal held that the right to prevailing party costs under Code of Civil Procedure section 1032, subdivision (b) is procedural, so Civil Code section 1953, subdivision (a)(4) voids a residential lease provision limiting it. That is one Court of Appeal decision. The California Supreme Court granted review on the same question in Gogal v. Deng, S292779, on November 19, 2025, and the court's civil issues list dated October 30, 2026 still shows it pending.

Does section 1950.5 award attorney fees to a tenant who wins?

No. The Aviles opinion states that no statute or other law provided for attorney fees in that case, and contrasts section 1950.5 with tenant protection statutes that do provide fees, citing Civil Code section 1942.5, subdivision (i) and section 1947.11, subdivision (a). Code of Civil Procedure section 1021 leaves fees to the agreement of the parties except as specifically provided by statute. A fee right in a residential lease dispute therefore generally has to come from the lease, a different statute, or another source of law.

Who decides whether a landlord acted in bad faith, the judge or the jury?

Aviles v. Shenon did not resolve that question, and the part of the opinion discussing it is unpublished. The court assumed without deciding that submitting bad faith to the jury was error, then held the landlords were not prejudiced because the trial court expressly stated it would have found bad faith on its own independent reasoning. Under California Rules of Court, rules 8.1110(c) and 8.1115(a), that unpublished discussion must not be cited or relied on in other actions.

Is the whole Aviles v. Shenon opinion citable as precedent?

No. The opinion is certified for partial publication. Its certification footnote excepts parts A through E of the Facts and Procedural Background and part A of the Discussion. Under rule 8.1110(c) the published part is treated as a published opinion and the unpublished part as an unpublished opinion, and under rule 8.1115(a) an unpublished opinion must not be cited or relied on in any other action, subject to narrow exceptions. The section 1953 and costs analysis is published and citable; the bad faith analysis is not.

How much can a California landlord charge as a security deposit now?

Civil Code section 1950.5, subdivision (c)(1) caps security at an amount equal to one month's rent in addition to first month's rent paid on or before initial occupancy, with exceptions. Subdivision (c)(5) allows up to two months' rent where the landlord is a natural person or a limited liability company whose members are all natural persons and owns no more than two residential rental properties collectively containing no more than four rented dwelling units, and subparagraph (B) of that paragraph disapplies the two month allowance where the prospective tenant is a service member. Subdivision (c)(6) states the subdivision does not apply to security collected or demanded before July 1, 2024.

Can a California security deposit claim be brought in small claims court?

Civil Code section 1950.5, subdivision (o) provides that an action under the section may be maintained in small claims court if the damages claimed, whether actual, statutory or both, are within the jurisdictional amount allowed by Code of Civil Procedure sections 116.220 or 116.221. Whether a given claim fits inside those limits depends on the amount at issue and on who is bringing the claim.

What happens next in Aviles v. Shenon?

The disposition affirms the judgment, reverses the order capping costs at $1,000 and directs the trial court to reconsider the motion to tax costs in light of the opinion, and provisionally reverses the order denying attorney fees, directing the trial court to consider that motion only if the costs it awards are less than $1,000 and never to let costs and fees combined exceed $1,000. Under California Rules of Court, rule 8.264(b)(1) a civil Court of Appeal decision is generally final in that court 30 days after filing, and rule 8.500(e)(1) sets a 10 day window after that to petition for review. We could not reach the appellate docket when writing this on November 5, 2026, so the description above reflects the opinion as filed.