Just to clarify on the security deposit...
See page 25 on the CA Tenants renters book - http://www.dca.ca.gov/publications/landlordbook/catenant.pdf
The owner/landlord can require you to pay a security deposit equal to TWO MONTHS rent for an unfurnished unit (two-and-a-half if you have a waterbed), and a security deposit equal to THREE MONTHS rent for a furnished unit (three-and-a-half with waterbed). This would be IN ADDITION to first month's rent.
SO, while the landlord is requesting 1st and Last month's rent, plus a security deposit equal to one month's rent, this IS allowed so long as the contract states you are paying FIRST MONTH'S rent plus a security deposit equal to TWO MONTHS rent. It's all in the language of the contract...
As far as the condition, I echo what has been said before me. Be concerned if the landlord refuses to make the unit "satisfactory" up front, because it's only going to get worse. Also, if you do decide to move in regardless, DOCUMENT EVERYTHING on move in. Don't make it into "he said, she said" when you are having to go to court to get your security deposit back.
Alan Kurpiewski, RealtorÂ®
CA BRE 01912043