In California, the days of having to save up two to three months' rent as a security deposit are largely over.
The law, which took effect on Monday, limits security deposits for rental properties to no more than one month's rent, except for small landlords. Assembly Bill 12was written by State Assemblyman Matt Haney (D-San Francisco).
“Large security deposits can create insurmountable barriers to homeownership and access for millions of Californians,” said Haney, who chairs the California Renters Caucus in the California Assembly. In a statement.
Previously, owners could charge two months' rent for unfurnished properties and three months' rent for furnished properties.
The average rent in Los Angeles is $2,795. Zillow, the online real estate marketplace.
The bill created an exception for landlords who have four or fewer rental units total and two or fewer owned properties.
The bill was drafted in December 2022 and passed by the Assembly and Senate last fall. It was signed by Gov. Gavin Newsom in October..
In the process, Los Angeles County Council.
Supervisor Lindsay Holbert said in May 2023 that the reason people couldn’t get into rental housing several years ago was “because of the fact that we have a lot of housing options.Pay about six months' rent in advance.”
“As someone with a high-paying job that pays above the county median income, it was difficult for me to rent a new apartment because it required a large down payment,” she said.
But the law has raised concerns in some parts of the real estate industry.
Sharon Orr Kubisch, a partner at Irvine-based Kahana Feld who specializes in real estate law, said the law has two potential drawbacks.
She said she supports the bill's goal of alleviating high rental costs, but the financial burden is being shifted onto landlords.
She pointed out that security deposits are meant to cover damages caused by tenants when they move out, and if the deposit is low, landlords are more likely to sue tenants who cause substantial damage.
“The landlord can ask for damages later, but they will most likely have to sue and hire a lawyer to get that money,” Orr Kubisch said.
He also said reducing security deposits could disadvantage tenants with poor credit or poor rental history.
Higher security deposits have given landlords more flexibility, Å Kubis said, and without those “safeguards,” she expects landlords will “be more vigilant and more careful with their tenants.”
But others argue the law would benefit those struggling most to find housing.
Masi Fawrhi, executive director of the California Immigrant Policy Center, said in a statement that the legislation would help vulnerable communities.
“California's high-cost rental market often imposes high security deposits on immigrants and people of color, effectively limiting their access to safe, affordable housing,” he said. “By capping high security deposits, AB-12 advances a measure of equity.”
Katherine A. Rodman, executive director and supervising attorney for Affordable Housing Advocates, a San Diego-based legal group that defends tenant rights, said the news drew mixed reactions among her mostly working-class clients.
“I know it's a big relief for a lot of people across the state, but at least here in the San Diego area, it's not a big issue,” Rodman said.
According to Zillow, the average rent in San Diego is $3,095.
She said “rising rent prices” have already led most landlords in the area to no longer ask for more than one month's rent as a deposit.
“I've lived here for 40 years and have only encountered a few instances of security deposits being unfairly withheld,” Rodman said. “Our problem is the rent.”
Rodman said he doesn't “take lightly” on the bill, but hopes it will be part of a broader initiative to make housing affordable in more parts of the state.
“It would certainly help, but we need to address the cost of rent because that's a really big obstacle,” she said.
