CA Assembly Bill 12: Security Deposits

For California homeowners, the landscape of property management is set to undergo a transformation with the implementation of Assembly Bill 12 (AB 12) in July 2024. Among the various provisions, AB 12 brings noteworthy changes to the regulations governing security deposits. In this letter, we aim to shed light on what homeowners need to know about these changes and how they may impact your rental property management.

This bill will, beginning July 1, 2024, prohibit a landlord from demanding or receiving security for a rental agreement for residential property in an amount or value in excess of an amount equal to one month’s rent, regardless of whether the residential property is unfurnished or furnished, in addition to any rent for the first month paid on or before initial occupancy. The bill, unless the prospective tenant is a service member, as defined, would prohibit a landlord from demanding or receiving security for a rental agreement for residential property in an amount or value in excess of 2 months’ rent, in addition to any rent for the first month, if the landlord (1) is a natural person or a limited liability corporation in which all members are natural persons and (2) owns no more than 2 residential rental properties that collectively include no more than 4 dwelling units offered for rent. You can read the full text of AB 12 here.

Key Changes to Security Deposits

1. Maximum Security Deposit Limits: AB 12 introduces revised limits on the maximum amount landlords can charge as a security deposit. Understanding these new limits is crucial for homeowners, as failure to comply may result in legal consequences. Be sure to check the specific details outlined in the bill for your region or consult with legal professionals for advice.

Preparing for AB 12

As the effective date of AB 12 approaches, our office will take proactive steps to ensure compliance and a smooth transition, including:

1. Review Lease Agreements: Examine your current lease agreements to identify any provisions related to security deposits. Ensure that your leases are in alignment with the new regulations introduced by AB 12.
2. Update Procedures: Revise your property management procedures to align with the revised timelines and requirements for security deposit handling. This may involve updating your record-keeping systems and communication practices.

Conclusion

California Assembly Bill 12 brings significant changes to the regulations governing security deposits, requiring homeowners and property managers to adapt their practices. This includes being more diligent in tenant selection and finding innovative ways to safeguard their investments within the confines of the new law.

At AM/PM Property Management, we understand the challenges that AB 12 brings. Our role is to guide and support our clients through this transition. We're here to offer advice and solutions that align with the new regulations while maintaining the viability and success of your rental properties. By staying informed, updating procedures, and seeking legal guidance we can navigate these changes effectively and foster a positive and compliant landlord-tenant relationship.

If you have questions please feel free to contact our office.

Disclaimer: For legal advice on AB 12 or related matters, please consult a qualified attorney; this information is not a substitute for legal counsel.