I've rented vacation beach homes in Mission Beach, San Diego, CA in the past and have typically paid a 25% deposit/hold fee. I am trying to reserve a vacation beach home in the same area and am being asked to pay 60% deposit/reservation fee. Is there a legal limit to a deposit fee?

Nope. Its what the market will bear. I would suspect that owner has been burned before.

Not unless locally regulated, which I doubt. I get 50% for my mountain house.