New laws in California affecting security deposit affairs were implemented on July 1, 2024, to transform the tenant-landlord relationship. Assembly Bill 12 on the 2023 laws, written by Assemblyman Matt Haney and signed by Governor Gavin Newsom in October 2023, extends and enhances the provisions regarding the security deposit amounts for both furnished and unfurnished rental units.
General Limitations
Currently, landlords can ask tenants for a deposit of only one month’s rent on all rented premises, whether furnished or unfurnished. This is a considerable decrease from the previous letting allowances of up to two months for unfurnished spaces and three for furnished ones.
Exemption for Small Landlords: Property owners with up to two residential rental properties totaling up to four dwelling units can still charge up to two months’ rent. Individuals must hold these properties, such as a limited liability company where all members are individuals or a family trust. This exception is not applicable when the tenant is a military service member.
Compliance Resources
The California Apartment Association (CAA) provides landlords with background papers containing guidelines, compliance forms, and educational webinars to help them with the new laws.
Implication: The Landlords and Tenants
For Landlords
The changes required because of the new law will be profound for leasing activities. The current study reveals that landlords must review the changes introduced by the current regulations to prevent legal consequences and make necessary alterations accordingly. The CAA insists landlords use the outlined information sources and attend information sessions to thoroughly grasp the law and its implications.
For Tenants
A slightly lowered deposit demanded by landlords is of great help to renters since it implies that housing is much cheaper and within the reach of renters. The law also seeks to reduce the costs of seeking shelter, precisely rental, by considerably cutting down on initial expenses.
Potential Challenges and Considerations
However, the new law does pose potential issues for landlords. Many landlords reported that their overall financial risk is slightly higher should the tenant’s damages exceed the permitted security deposit amount. Moreover, the characterization of and the criteria that small landlords fit into also need to be revised due to the specificity of the law’s exemption.
The Broader Context
California’s new security deposit law is consistent with other initiatives to enhance tenants’ rights and housing affordability. Developed from the legal perspective, the state’s purpose in regulating the maximum security deposit is to address issues of rental fairness and improve housing availability.
Frequently Asked Questions About California’s New Security Deposit Law
General Questions
Q: When did the new security deposit law go into effect?
A: The new law went into effect on July 1, 2024.
Q: How much can landlords charge for a security deposit now?
A: Landlords should charge a security deposit equal to one month’s rent for furnished and unfurnished units. However, there are exceptions for small landlords (owning two or fewer properties with four units or less) who can still charge up to two months’ rent.
Q: Does the new law apply to all rental units in California?
A: Yes, the new law applies to all rental units in California, except the small landlord exemption.
For Landlords
Q: What should landlords do to comply with the new law?
A: Landlords should review their lease agreements and rental policies to ensure compliance with the new security deposit limits. They should also familiarize themselves with the resources provided by the California Apartment Association (CAA).
Q: Can landlords still charge pet deposits or other fees?
A: Landlords can still charge pet deposits or other fees allowed under California law. However, these fees are separate from the security deposit and have different rules and regulations.
Q: What happens if a tenant damages the rental unit and the security deposit is insufficient to cover the costs?
A: If the security deposit is insufficient to cover the cost of damages, the landlord may pursue additional recovery options, such as small claims court.
For Tenants
Q: How does the new law benefit tenants?
A: The new law reduces the upfront costs for tenants when renting a property, making housing more affordable and accessible.
Q: Can tenants still be charged a security deposit?
A: Yes, tenants will still be required to pay a security deposit, but the maximum amount is now limited to one month’s rent (with exceptions for small landlords).
Q: What should tenants do if they believe their security deposit is being wrongfully withheld?
A: Tenants should first attempt to resolve the issue with the landlord. If unsuccessful, they may consider contacting the California Department of Consumer Affairs or seeking legal advice.
Disclaimer: This article provides a general overview of the new security deposit law and is not intended as legal advice. Landlords and tenants are encouraged to consult with legal professionals for guidance specific to their circumstances.