Law limiting security deposits goes into effect July 1

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CALIFORNIA – Starting July 1, landlords will only be allowed to collect one month’s rent for the security deposit on a rental property.

Assembly Bill 12, signed into law last October, says regardless of whether the residential property is unfurnished or furnished, only one month’s rent can be charged in addition to any rent for the first month paid on or before initial occupancy. 

Small landlords are exempt

According to bill author Assemblymember Matt Haney’s (D-San Francisco), 53% of California renters indicate that they are able to afford their rent but they’re unable to get an apartment because they simply can’t afford to pay the two month’s rent as a security deposit. 

“This new law is a simple common sense change that will have an enormous impact on housing affordability for families in California, while also balancing a landlord’s need to protect themselves against potential liability,” said Haney in an October news release.

Small landlords that own only 2 properties with a total of no more than 4 units will be exempt – they can charge up to 2 month’s rent, unless the tenant is a service member.

Haney said landlords will still be able to seek damages from tenants who are responsible for harm to the property that exceeds the amount of the security deposit.

Existing rental agreements will not be affected by the new law.

Unintended Impact

Rincon Property Management says AB 12 creates an unintended impact on marginal applicants. 

Legislation designed to protect tenants may inadvertently deter landlords from taking risks on individuals with less-than-ideal rental histories or financial profiles. This could exacerbate existing challenges in finding housing for vulnerable populations, potentially leading to increased housing insecurity and homelessness,” said a statement on the website.

The property management says landlords may seek alternative ways to mitigate risk, such as increasing rental rates or implementing stricter screening criteria, further impacting affordability for tenants.

To read the full Assembly Bill 12 visit https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB12

RELATED: CA lawmakers approve eviction protection to regulate landlords who circumvent rent increase laws

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