Hey folks! Big news is shaking up the rental market in California, and it's worth your attention. Governor Newsom has recently signed a significant piece of legislation, known as Assembly Bill 12 (AB 12), set to take effect in July 2024. This law is a real game-changer for security deposits in rental agreements.
The Inside Scoop on California's Assembly Bill 12
Traditionally, landlords could charge up to two months' rent for an unfurnished unit and even three months for a furnished one. Well, those days are over! The new law limits security deposits to just one month's rent, whether the unit is furnished or not. Military folks, you're still in luck: you'll continue to enjoy the current exceptions.
Read the official text of AB 12 here.
What About Our Small Landlords?
We understand that not every landlord is managing a large portfolio. For our valued small landlords, particularly those who own no more than two residential properties with up to four rental units, there's a bit of leeway. You can still ask for up to two months' rent as a security deposit. Remember, this applies only if the property is owned by an individual, a personal LLC, or a family trust.
Time to Brush Up on Security Deposit Rules
Landlords, this is a wake-up call. While most of you know that you are able to collect a security deposit at the beginning of a tenancy, it's surprising how many aren't clear on what to do when the tenant leaves. In the past, tenants mainly took landlords to small claims court for issues around security deposits. Nowadays, some lawyers are upping the ante, suing for emotional distress and damages way beyond the security deposit amount.
So, if your security deposit accounting looks like your teenager's bedroom, get it cleaned up. And if you've got questions or need guidance, we're always here to help.
A Step Towards Easier Housing in California
So why does this matter? Well, Matt Haney, the guy behind
AB 12, says that gigantic security deposits can put a real dent in housing affordability. This law aims to strike a balance, making it easier for Californians to secure a home while still giving landlords a safety net. Plus, California is now the twelfth state to put such limits, joining the likes of Delaware, Alabama, and Massachusetts.
Wrapping It Up
As we edge closer to the July 2024 enactment of Assembly Bill 12 (AB 12), it's crucial for Property Managers and Landlords to prepare for its implications. This legislation represents a significant shift, particularly in how security deposits are managed. For tenants, AB 12 is a welcome change, potentially easing the financial burden of securing a rental and making the housing market more accessible to a wider audience.
For landlords, the landscape is becoming more complex. AB 12 doesn't offer additional protections for property owners; rather, it necessitates a strategic reevaluation of how they manage their rental properties. This includes being more diligent in tenant selection and finding innovative ways to safeguard their investments within the confines of the new law. It's a time for landlords to think creatively and proactively about their rental practices.
At Authority Property Management, we understand the challenges and opportunities that AB 12 brings. Our role is to guide and support our clients through this transition. We're here to offer insights, advice, and solutions that align with the new regulations while maintaining the viability and success of your rental properties.
This legislative change is a reminder of the ever-evolving nature of the real estate industry. Staying informed, adaptable, and forward-thinking is key. We encourage our the rental community to approach AB 12 not just as a regulatory update but as an opportunity to grow and refine their rental strategies.
Let's navigate this change together, ensuring that our rental community in Redding and surrounding areas continues to thrive. For any questions or assistance regarding AB 12 or other property management concerns, reach out to us at Authority Property Management. We're committed to being your trusted partner in this dynamic real estate journey.
Have questions feel free to reach out to us.
Check out our other blog on tenant security deposits.
Disclaimer: For legal advice on AB 12 or related matters, please consult a qualified attorney; this information is not a substitute for legal counsel.
