July 1, 2024 Law for California Security Deposits

Yellow bungalow

Beginning July 1, 2024, under the passage of AB12, there will be significant changes to the security deposit law for residential property as follows:

• Rental property owners will only be able to demand or receive one month’s rent in addition to the first month’s rent, for security deposit, whether the unit is furnished or unfurnished.
• However, small property owners will be able to demand or receive two month’s rent in addition to the first month’s rent before initial occupancy. 
• A small rental property owner is defined as one who:
• Owns no more than two residential rental properties that collectively include no more than four dwelling units offered for rent.
• Is a natural person or LLC in which all members are natural persons. A family trust may also qualify as a small landlord.
• Exception: If the prospective tenant is a service member, then the exception for small landlords does not apply, and the small property owner is limited to one month’s rent in addition to the first month’s rent.
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• Owners who currently hold a security deposit or those who demand or collect a security deposit in excess of one month’s rent prior to July 1, 2024, may retain the security deposit even though it is more than one month’s rent.

Unfortunately, one month's rent really provides very little protection to the property owner who may have to engage in eviction costs, and/or damage costs.  An uncontested eviction cost alone may be over $1200, see this site for an idea of costs, and that does not cover the cost of repair and cleanup. One attorney recommends that the property owner review an applicant's credit and look for a score of at least 700 FICO which ideally would indicate a more responsible tenant. Applicants' professions and history, though, are not always proof of good behavior.  (I once lived near a married couple in a high rise condo building who kept cats--more than allowed on the lease agreement--and allowed them to completely ruin a bedroom which was used as the litter box, as well do nothing about controlling fleas. The owner had to leave the unit vacant for months in order to restore hygiene and flooring.) So back to  the amount of deposit -- another good option is to own property in an LLC.

Please contact me if you would like additional information on tenant/property owner issues.

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

California: 2019 Just Cause Eviction and Rent Cap Bill AB 1482

Studying new rental laws?

As of this date, this California state bill has not yet been signed by the Governor, but is expected to be since he has indicated his approval.
Bill signed in October, 2019.
Update: Long Beach rent ordinance rescinded by Council on Dec. 3rd, 2019.

Exemptions for Previously Existing Ordinances

This AB 1482 recognizes local ordinances, such as Long Beach Tenant Relocation Assistance (see link at bottom), passed prior to September 1, 2019 as follows:
Even if a local ordinance is less protective than the AB 1482, it will preempt the newer state law unless "more protective provisions" are passed to that local ordinance after September 1, 2019. If Long Beach or other cities were to do that, specific terms must be met.  "More protective" means:

"1. The local law must be 'consistent' with AB 1482. 2. The local law must provide higher relocation assistance or provide additional protections. 3. The local government has made a binding finding that their local ordinance is 'more protective.' "

 So if you're a Long Beach landlord or renter, check the link to the local ordinance below for complete coverage of its terms which went into effect August 1, 2019. Please note that OYOs and stock coops may be subject to rent caps and just cause under the new AB 1482, as noted below. Note:  Just cause under AB 1482 applies to tenants who have been continuously and lawfully occupying the property for 12 months or more. 

Otherwise, if you're in another city without its own ordinance, or unincorporated areas, you will probably need to look at the link to AB 1482.

AB 1482:
Goes into effect January 1, 2020.

Rent cap:  All rental increases since March 15, 2019 will count toward the cap of 5% plus inflation, or up to 10% total, whichever is lower.  See indexes for determining inflation https://www.bls.gov/regions/subjects/consumer-price-indexes.htm#CA  or this index if regional information not available for you  https://www.dir.ca.gov/OPRL/CPI/EntireCCPI.PDF.

Exemptions from the rent cap: 
Single family residences and condominiums, provided renter receives notice of the exemption (this may not include stock coops or OYOs, however and they may be subject to rent caps and just cause);
The owner is not a real estate investment trust, a corporation, or an LLC in which one member is a corporation;
Housing built issued a certificate of occupancy in last 15 years, generally meaning newer housing;
A duplex in which one unit is owner's primary residence;
Housing restricted by deed as low, low income housing;
Dormitories for higher education institutions;
Housing already subject to local rental control ordinance;
Section 8 rentals are likely exempt;
Exemption for just cause for ADUs, and an SFR that rents out up to 2 bedrooms in the house, or in which a tenant shares bathroom or kitchen facilities with the owner; 

Reasons for just cause eviction include: non payment of rent; breach of lease after given notice to correct violation; nuisance; unlawful use of property; damage to property; refusal to allow entry; when a tenant fails to vacate after giving notice of leaving; subletting property in violation of lease.

One month's rent must be paid to a tenant in the following circumstances including: withdrawal from rental market; demolition or substantial remodeling of property; government order to vacate; conversation of property to owner occupied.  Relocation assistance is not contingent on the renter's income amount.

Finally:
This post is NOT an exhaustive summary of these laws, so it is advisable for additional assistance to be consulted whether you are a landlord or a tenant.    However, I would be happy to provide the entire legal summary, as currently provided by the California Association of Realtors legal team, in pdf format, if you provide me with your contact information. It covers many questions and answers in great detail concerning AB 1482. 

For reference:  CA Bill 1482 , Long Beach Tenant Relocation Assistance Bill.

Finally, complete property search of both sold and active listings are available on my website at www.juliahuntsman.com, simply by looking in the dropdown list under "status"-- the following is a link to income property throughout Los Angeles County actively listed in the MLS:  Income properties.
Rental/for lease properties may also be searched on the site in the same way.
Please feel free to  contact me for help on finding a property!!
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Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996