As of today, July 1, 2024, a new California law has taken effect, limiting security deposits to one month’s rent for both furnished and unfurnished units.
This legislation, AB 12, introduced by Assemblyman Matt Haney (D-San Francisco) and signed into law by Governor Gavin Newsom in October 2023, represents a significant shift from previous regulations. Previously, landlords could charge up to two months’ rent for an unfurnished unit and three months’ rent for a furnished one, with an exception for tenants who are service members.
Exceptions for Small Landlords
The new law includes an exception for certain small landlords. Property owners with no more than two residential rental properties, collectively comprising 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 held by a natural person, a limited liability company (with all members being natural persons), or as a family trust. However, this exception does not apply if the tenant is a military service member.
“It’s crucial for landlords across California to understand and comply with these updated security deposit regulations,” said Whitney Prout, executive vice president of legal affairs for the California Apartment Association. “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.”
Why Choosing a Great Real Estate Agent Matters
Navigating these new regulations can be complex, and it's essential to choose a knowledgeable and experienced real estate agent who can guide you through the process. A great real estate agent can help you understand the implications of this law, ensure compliance, and provide valuable insights into managing your rental properties effectively.
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