By Eric Engelbert
Starting July 1, 2024, a new law in California affects how much landlords can charge for security deposits. This change, known as AB12, is designed to make renting fairer and more accessible. As always, Orange County Real Estate, Inc. is here to help you navigate these changes.
Understanding the New Law AB12
AB12 limits the security deposit that a landlord can request to one month's rent. This law aims to ease the financial burden on tenants who often struggle to gather large sums for deposits.
However, there are exceptions. A landlord can ask for up to two months' rent as a security deposit if:
- The landlord is an individual or part of a limited liability company (LLC) where all members are individuals.
- The landlord owns no more than two residential rental properties, collectively including no more than four units. For instance, if you or your partner own a duplex and a triplex, you exceed the limit and do not qualify for the exception.
It's important to note that this exception does not apply to active service members. For them, the maximum deposit remains one month's rent.
Special Conditions
The new law does not cover pet deposits or last month's rent, but landlords can still charge a reasonable pet rent. However, this might change with the upcoming AB 2216 law. Stay tuned for updates!
The law only applies to new security deposits obtained after July 1, 2024. Any deposits obtained before this date can remain as they are.
Why the New Law AB12?
Aiming for Fairness
The main goal of AB12 is to make renting more accessible. By limiting security deposits, the law helps renters keep more money in their pockets. This change is especially beneficial in high-rent areas like Orange County.
Proponents and Critics
Many housing advocates support AB12, seeing it as a way to help renters. They argue that high-security deposits can be a barrier to finding a home, particularly for low-income families.
On the other hand, some landlords and real estate organizations oppose the law. They believe that higher deposits protect them from potential damage and unpaid rent. This law forces them to find other ways to safeguard their properties.
For Tenants
AB12 is good news for tenants. It means lower upfront costs when moving into a new home. With more affordable security deposits, tenants have more flexibility and can save money for other expenses.
For Landlords
While the law offers relief for tenants, it presents challenges for landlords. They must now rely more on thorough tenant screening and regular property inspections to ensure their properties are well-maintained. Despite these challenges, landlords can still charge reasonable pet rent, which provides some financial protection.
Orange County Real Estate, Inc. is Here to Help
Navigating new laws can be tricky, but that's where Orange County Real Estate, Inc. comes in. Our team excels in sourcing properties, negotiating deals, and managing properties efficiently. We stay updated with the latest laws to provide the best service to our clients.
Whether you are a landlord needing guidance or a tenant looking for a new home, we are here to help. Our expertise in Orange County real estate ensures you get the best advice and support.
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The new security deposit law, AB12, marks a significant change for landlords and tenants alike. By capping deposits at one month's rent, the law aims to make housing more affordable and fair. While it poses some challenges for landlords, it offers much-needed relief for tenants.
Orange County Real Estate, Inc. is committed to helping you understand and adapt to these changes. With our expert knowledge and dedication, we ensure that both landlords and tenants navigate this new landscape with ease. If you have any questions or need assistance, don't hesitate to reach out to us.
Stay informed, stay prepared, and let Orange County Real Estate, Inc. guide you through the complexities of the real estate market.
