With the passage of AB 12, unless a limited exception applies, California landlords who offer for rent a residential dwelling will only be able to receive a security deposit from a tenant in an amount up to the equivalent of one month’s rent.
AB 12 Makes Changes to Civil Code 1950.5
AB 12 is a new law that was recently signed by Gov. Newsom. It was authored by a democrat, Assemblyman Matt Haney.
Existing law allows a landlord who rent residential property in California to collect from a tenant the equivalent of up to two month’s rent as a security deposit for an unfurnished unit, and up to three month’s rent as a security deposit for a furnished unit. AB 12 changes these rules and reduces the amount that a landlord can demand for a security deposit.
Under AB 12, effective July 1, 2024, a landlord will only be allowed to demand a security deposit for a residential rental in an amount up to the equivalent of one month’s rent. Civil Code 1950.5(c)(1).
In addition, a landlord can also collect from a prospective tenant the first month’s rent, prior to the tenancy commencing.
Under AB 12, a landlord who rents residential property can demand up to the equivalent of two months’ rent as a security deposit, if the landlord meets both of the following requirements:
- The landlord is a natural person or a limited liability company in which all members are natural persons.
- The landlord owns no more than two residential rental properties that collectively include no more than four dwelling units offered for rent.
Civil Code 1950.5(c)(4).
This exception does not apply if the prospective tenant is a service member. In the event that the prospective tenant is a service member, the landlord can only demand up to the equivalent of one month worth of rent, even if the landlord would have otherwise satisfied the requirements for the exemption.
AB 12 Video
Bad for Landlords and Property Owners
These new security deposit rules are bad news for landlords in an already bad landlord environment. A landlord will need to be extra careful in screening potential tenants, because having only one month’s worth of “security” won’t go far when the landlord/tenant relationship goes sour.
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The information in this article and blog are not meant to be legal advice and is intended for educational purposes only. The laws change frequently and this article may not be updated to reflect current rules. Do not rely on this article when making legal decisions. Consult with legal counsel regarding your particular case before taking any action. It is important for landlords to understand what jurisdiction the rental property is located in, and whether or not there are any special tenant protections or rent control applicable to the property.