Legal Question in Real Estate Law in California

The terms of your rental agreement and the Civil Code will give you the answer to your question.

First off, a breach of a contract does not void a contract. Very little voids a contract. A breach of a contract entitles the non-breaching party to damages or sometimes other relief or both. That is not void.

The deposit is a prepayment against any unpaid amounts owed under the contract. It is not a penalty fund. If the tenant moved out before the end of the contract or without sufficient notice under a month-to-month and you lost rent because of it, you can take that out of the deposit. If the tenant or subtenant paid you rent, though, even though subletting is a breach of the agreement it is not one that damages you. You can choose to terminate the agreement for that violation, but that is not necessarily money damages to you, particularly if you could have waived the breach and had a paying subtenant, you may also be obligated to accept a subtenant if the subtenant is reasonably as well qualified to be a tenant as the original one.

So the bottom line is that it must be determined if you actually have any out of pocket losses due to these breaches of the rental agreement or lease. If you do, you can deduct them from the deposit. If not, you can't.