Navigating the New Security Deposit Law

Navigating the New Security Deposit Law

As of July 1 2024, a significant change has taken place in California rental laws concerning security deposits. The newly enacted legislation, Assembly Bill 12 (AB 12), spearheaded by Assemblyman Matt Haney from San Francisco, limits security deposits to one month’s rent for both furnished and unfurnished units. Signed into law by Governor Gavin Newsom in October 2023, this legislation marks a substantial shift from the previous regulations, which allowed landlords to charge up to two months’ rent for unfurnished units and three months for furnished ones, except for tenants who are service members.

Key Changes Under AB 12

Under the new law, most landlords can only require a security deposit equivalent to one month’s rent, regardless of whether the unit is furnished or unfurnished. This is a notable reduction from the previous limits, which permitted higher deposits. However, there is an important exception for certain small landlords. Property owners who have no more than two residential rental properties, collectively including no more than four dwelling units, can still collect up to two months’ rent as a security deposit. To qualify for this exception, the property must be owned by a natural person, a limited liability company (LLC) with all members as natural persons, or a family trust. This exception, however, does not apply to tenants who are military service members.

Why This Matters

Understanding and complying with these updated regulations is crucial for all landlords. Whitney Prout, Executive Vice President of Legal Affairs for the California Apartment Association (CAA), emphasizes the importance of familiarizing oneself with the new rules.

“We strongly encourage all CAA members to review our updated security deposits background paper, which reflects the changes brought by AB 12. This resource is designed to help our members navigate this significant change and ensure they’re operating within the bounds of the new law.”

Resources and Support

To assist landlords in understanding and implementing the new law, the CAA is hosting a webinar on July 30 titled “Security Deposits Ins and Outs.” This webinar will cover essential aspects of the law, including the recent changes, maximum allowed security deposits, permissible deductions, the walkthrough process, and return requirements.

Golden State Property Management's Commitment

At Golden State Property Management, we are committed to keeping our clients informed and compliant with all relevant regulations. Our team is here to support you through these changes and ensure a smooth transition. We encourage all our landlords to take advantage of the available resources and stay updated on the latest legal requirements.

For more information, feel free to contact us or visit the CAA website for detailed guidance and updates. Let’s work together to ensure a seamless experience for both landlords and tenants under these new regulations.