AB 12 (Security Deposit Limits) Signed Into Law

California Assembly Bill 12, signed into law by Governor Gavin Newsom, marks a significant change in the state’s approach to security deposits for rental properties. Authored by Assemblyman Matt Haney, a Democrat from San Francisco, the bill gained support in both the Senate and the Assembly before becoming law in September.

The most notable aspect of AB 12 is its adjustment of the limits on security deposits. Previously, landlords in California had the authority to charge up to two months’ rent for an unfurnished unit and three months’ rent for a furnished one. However, with the passage of this legislation, these limits have been standardized, and landlords are now restricted to charging a maximum of one month’s rent for both furnished and unfurnished units.

This change is expected to have a direct impact on both landlords and tenants. For tenants, it means a potential reduction in upfront costs when securing a rental property, as they will only need to pay a security deposit equivalent to one month’s rent. This can be particularly beneficial for individuals and families navigating the high cost of living in California.

Landlords, on the other hand, will need to adjust their practices and expectations regarding security deposits. While the legislation may initially present a challenge for some property owners who were accustomed to charging higher security deposits, it is also designed to protect tenants from excessive upfront financial burdens and encourage a more reasonable and equitable rental market.

It’s worth noting that changes in rental laws often spark discussions and debates within the real estate industry. Supporters of such legislation argue that it promotes fairness and affordability for tenants, while critics may express concerns about the potential impact on landlords’ ability to cover potential damages or losses.

AB 12 reflects an ongoing effort by California lawmakers to address issues related to housing affordability, tenant rights, and the balance of power between landlords and renters. As with any legislative change, the true effects and implications of AB 12 will become more apparent as it is implemented and integrated into the state’s rental market over time.