Current Law (Prior to July 2024):
The law dictates how landlords can set security deposit rules for rental property. It specifies that landlords cannot request or receive more than 2 months’ rent as a security deposit for an unfurnished home or 3 months’ rent for a furnished one. Additionally, tenants pay the rent for the first month before moving in. As we navigate the landscape of rental regulations, understanding these existing norms sets the stage for exploring the upcoming changes effective July 1, 2024.
Small Landlords are Exempt
If you own your rental property as an individual, personal LLC, or a family trust and have no more than two rental properties with up to four dwelling units in total, you’re exempt from AB 12, except when renting to service members (details below). This means that small landlords will still be able to collect up to two months rent as a security deposit. For all other landlords, continue reading to understand how AB 12 affects your rental security deposits.
Examples of exempt landlords, own property in one of the following combinations:
|One Single Family Property
|One Single Family Property + One Single Family Property
|One Single Family Property + One Duplex
|One Duplex + One Duplex
|One Single Family Property + One Triplex
Understanding AB 12: New Security Deposit Limits Effective July 1, 2024
Starting July 1, 2024, AB 12 imposes a limit on landlords, restricting them to collecting no more than the value of one month’s rent as a security deposit, in addition to the rent for the first month, paid on or before the initial occupancy.
Move-In Example for Landlords Affected by Assembly Bill 12:
For landlords impacted by AB 12, the updated limits on security deposits will be applicable to new tenants moving in starting July 1, 2024.
But what about collecting the last month’s rent before move-in? AB 12 clarifies that while it restricts security deposits, it “does not prohibit an advance payment of not less than six months’ rent if the term of the lease is six months or longer.” This means the only scenario where a landlord can receive payment exceeding the security deposit and first months’ rent is if the tenant opts to prepay six or more months’ rent in advance
Compliance and Implementation
As a professional property management company, we are committed to seamlessly integrating the new security deposit regulations introduced by AB 12. Our team will ensure that all lease agreements align with the updated security deposit guidelines starting July 1, 2024. We will provide clear communication to our private clients regarding these changes and offer assistance in navigating the transition. Our goal is to facilitate a smooth and compliant process for all parties involved, ensuring a positive leasing experience under the evolving legislative landscape.
Serving Those Who Serve: Understanding Security Deposit Rules for Service Members
For all landlords: When renting a residential property to a service member, the deposit cannot exceed one month’s rent, in addition to the first month’s rent, paid on or before initial occupancy.