California Landlords Can No Longer Demand Security Deposits Greater Than One Month’s Rent Starting July 2024

A new law in California is going into effect starting July 2024 which states that landlords can no longer demand security deposits greater than one month’s rent.

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Under California law, security deposits have been described as payments, fees, or charges that a landlord collects from a at tenant at move-in and holds onto to cover any potential damages, cleaning costs, or unpaid rent if the tenant breaks their lease agreement. Normally, a security deposit amount can vary from one to two months’ rent, but renters have also seen deposit requirements of up to three months’ rent.

However, as of July 1, 2024, landlords in California will no longer be able to demand security deposits greater than one month’s rent thanks to Assembly Bill 12 . The bill, which was approved by Governor Gavin Newsom on October 11, 2023, takes effect next month and will now limit the security deposit amount a landlord can charge a tenant upon move-in after July 1, 2024.

Existing lease agreements will not be affected by AB 12. Some other exclusions also apply, like to landlords who own no more than two residential properties that collectively have no more than four units for rent. For these “smaller” landlords, they will be able to request up to two months’ rent under the new law, “in addition to any rent for the first month paid on or before initial occupancy.”

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According to the legislation, “The bill [as of July 1, 2024] would 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.”

Additionally, “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.”

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