UPDATE: The proposed law limiting security deposits to one month's rent for both furnished and unfurnished units has passed in the legislature and now sits on the Governor's desk.
Let's revisit security deposits since 85% of housing providers don't get it right and there may be changes underway.
Under current state law, the maximum permissible security deposit landlords can demand is two months' rent for unfurnished units and three months for furnished units.
California Assemblymember and Chair of the California Legislative Renters Caucus, Matt Haney, believes that this is too burdensome for people trying to land a new pad and has put forth a bill that would limit the security deposit to one month's rent, without regard to the tenant's financial status or eviction history or whether the rental unit is furnished.
This caucus - self-proclaimed as "small but mighty" - is comprised of only five state legislators who are renters. Meddling with security deposit rules is only one part of a larger agenda to advance tenants' rights.
We don't want to put words in anyone's mouths, so watch and listen to their own remarks.
"It's not only an issue of whether you can afford the rent - it's whether you can get into an apartment or a house to begin with. Many people in our state are looking at paying over $10,000 just to move into an apartment. Not many people have that much money sitting in the bank."
This is not the first time that politicians attempted to upend security deposit rules. In recent memory, the failed bill of SB 3260 would have prohibited landlords from demanding a single, upfront security deposit. Instead, tenants would be allowed to either pay the security deposit in a spread-out fashion over six months or in the alternative, obtain a surety bond to cover damages he or she would be responsible for in the event that there are damages to the rental unit beyond wear and tear.
AB 12 provides insecurity over security deposits
We get it. Incoming tenants may have to fork over a lot of money to move it, but what about the money the landlord potentially has to spend when the tenant moves out?
A recurring theme we hear from tenants' advocates is that housing is a human right, and people deserve second chances. Yet AB 12 would hurt the very renters it purportedly seeks to help by making housing providers more apprehensive to rent to applicants who don't fully meet established criteria.
While the underlying goal of the legislation is to open up housing to all, it would have the opposite effect as risk-averse landlords become more selective in who they rent to.
Land of the free and rental properties of the brave
It's important to note that for active-duty military personnel who are deployed, the landlord cannot charge more than one month's rent as a security deposit. Moreover, there are specialized rules relating to the return of the security deposit and terminating the lease when duty calls. Consult an attorney.
Back to basics
There is a host of errors that can be made in security deposit accounting during the move-in process and on the eve of the tenancy ending. We need to provide tenants with an itemized statement of the unit's existing condition with a move-in checklist, affording the tenant the opportunity to note any damages to avoid being held responsible for them upon moving out.
The security deposit can be used for specific purposes, such as unpaid rent, repair costs beyond normal wear and tear, and cleaning expenses necessary to return the unit to its original condition. This raises the question of what "normal wear and tear" means. Do not fret - we've put together a handy cheat sheet for reference.
Errors may become more costly
In an earlier article, we said that dustups over security deposits are the most common reason landlords find themselves in small claims court, but it doesn't stop there.
When the tenant makes a chapter change in their housing, there's quite a bit of anxiety over getting their security deposit back, and it used to be that landlords were only liable for the amount the tenant paid.
Yet we are aware of opportunistic attorneys who are now suing landlords for multiples of the security deposit based on the emotional distress caused to the slighted tenant.
Please familiarize yourself with the rules surrounding security deposit accounting and when in doubt, Bornstein Law can ensure you are in compliance.