Security Deposit Limits May be Coming to California

Assembly Bill 12 proposes a regulation that aims to restrict security deposits to a maximum of one month’s rent, irrespective of the furnishing status of a rental unit. In the event of the bill’s successful passage and subsequent endorsement by Governor Gavin Newsom, California would join the ranks of twelve states implementing such limitations on security deposits.

According to Matt Haney, D-San Francisco, the author of the bill, security deposits pose barriers for individuals seeking to move into apartments, often leading them to remain in cramped, insufficient, or even unsafe living spaces. Haney further explained that in some cases, people accumulate debt or face financial burdens that hinder their ability to afford other essential necessities.

Haney emphasized that the bill has received extensive support in the Assembly, including from lawmakers who are landlords, as well as labor organizations representing teachers, nurses, and grocery store workers.

Assembly member Diane Dixon, a Republican from Newport Beach, was among those who voted against the bill with a vote tally of 53-14. Her opposition stemmed from concerns regarding the potential consequences of the legislation on the housing supply.

In a statement, Dixon expressed her viewpoint, saying, “The more we impose excessive regulations on individuals’ capacity to provide a successful product, the likelihood of its scarcity increases. Landlords rely on security deposits to mitigate potential damages, and any unused funds are subsequently returned to the tenant.”

Alternatives to Security Deposits

Debra Carlton, spokesperson for the California Apartment Association, expressed disappointment that Haney, the bill’s author, did not explore alternative options.

According to Carlton, security deposits hold significant importance as they enable landlords to address repair costs for rental units. Additionally, in the event of an eviction, deposits assist landlords in covering associated expenses. The association highlighted that court evictions can last up to six months and cost an average of $10,000.

To address these concerns, Carlton suggested that tenants consider participating in insurance or bond programs, which could provide coverage for potential damages akin to security deposits.