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AB 12 limits security deposits starting July 2024 in California

By G. David Lapin On November 7 2023

California's New Security Deposit Law: What Landlords Need to Know

Governor Gavin Newsom recently signed Assembly Bill 12 into law, bringing significant changes to how landlords can handle security deposits in California. This new legislation aims to address the rising costs of renting in the state, providing relief to tenants while impacting landlords' financial considerations.

The Key Changes

Starting July 1 of 2024, landlords in California will be restricted to charging a maximum of one month's rent as a security deposit. Previously, landlords could charge up to three months' rent, which often created financial burdens for tenants, especially in high-cost areas like Morro Bay.

Potential Concerns

While this law provides much-needed relief for tenants, there are concerns among some renters that landlords might offset this change by increasing monthly rent. This could pose challenges for individuals on fixed incomes.

Landlords' Perspective

The California Apartment Association's Executive Vice President, Debra Carlton, expressed opposition to the new law, highlighting concerns about limiting property owners' ability to cover property damage or unpaid rent. Some landlords may find this change to be an additional financial burden, potentially impacting their bottom line.

California Joins the Ranks

Under AB12, small-scale landlords who possess just two properties with a combined total of no more than four units are granted an exemption. They will still retain the right to pursue restitution from tenants held accountable for property damage surpassing the security deposit amount.

With this recent legislation, California aligns itself with 11 other states in limiting security deposits to the equivalent of one month's rent.

The signing of Assembly Bill 12 represents a significant shift in how landlords handle security deposits in California. While it offers relief to renters by reducing upfront costs, it's important for landlords to understand and prepare for the impact on their rental operations. As of July 1 next year, landlords will be required to cap security deposits at one month's rent, marking a new era in tenant-landlord relations in the Golden State.

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