Los Angeles Multifamily Rent Control

California is Capping Security Deposits with AB 12

This past week, Governor Gavin Newsom signed Assembly Bill 12 into law. This legislation places limits on the amount of security deposits that landlords can require from tenants. This change is set to affect the rental landscape in California, particularly in higher-cost areas.

The Details of AB12

  • Effective as of July 1, 2024:  The California State Law will go into effect as of July 1, 2024.
  • The New Security Deposit Limit:  Assembly Bill 12 restricts landlords from requiring security deposits exceeding one month’s rent.
  • Traditional Landlord Protections Still Remain:  Landlords retain the ability to seek damages from tenants who cause property damage exceeding the security deposit amount.
  • Exemptions from AB12:  Small landlords owning only two properties with a maximum of four units are exempt from AB12.
  • Other States With Security Deposit Limits:  California will become the 12th state to also have capped security deposits to one month’s rent.  A few others include New York, Delaware, Rhode Island, and Massachusetts.

Unintended Consequences:

  • Marginal Applicants Be Damned:  Legislators create tenant protection legislation which in many ways ends up hurting the very people they are designed to protect. For instance, Rent Control restricts supply and makes housing less affordable for anyone looking for an apartment, or looking to move.  Three year eviction moratoriums cause landlords to review tenant applications with a heightened level of scrutiny because should the tenancy should go south, there would be little to no recourse for the landlord.  AB 12 will likely do much of the same – make it harder for landlords to take chances on leasing an apartment to an otherwise marginal applicant.

By mrlamultifamily

I am a multifamily real estate specialist in Los Angeles.

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