Navigating the New Security Deposit Law: What Self-Managing Property Owners Need to Know
/As we ride the waves of change in 2024, a new security deposit law is set to impact California landlords and property managers. Effective July 1st, 2024, this legislation introduces significant changes to security deposit limits. Here’s a detailed look at what’s coming and how it affects you as a self-managing property owner.
What’s Changing with Security Deposits?
Starting July 1st, 2024, landlords in California will face new regulations regarding security deposits. Here’s what you need to know:
Residential Rentals: The maximum security deposit will be capped at one month’s rent for unfurnished units and two months’ rent for furnished units. This change aims to create a more predictable and fair rental market.
Timely Returns: Landlords must now return security deposits within a strict 21-day window after a tenant vacates the property. This ensures tenants receive their deposits back promptly, avoiding unnecessary delays.
Detailed Statements: Landlords are required to provide a detailed, itemized statement of any deductions made from the security deposit. This transparency helps maintain trust and clarity between landlords and tenants.
Understanding the Small Landlord Exemption
Question: I own several residential and commercial rental properties in California. I also own rental properties out of state and manage single-family home rentals in California for other owners. How does the small owner exemption to the new security deposit limit apply to me?
Answer: Effective July 1, 2024, most landlords can only collect a deposit equivalent to one month’s rent. However, there is a “small owner exception” which applies to property owners who own no more than two residential rental properties (i.e., parcels), with no more than four units total. Here are some specifics:
Out of state rentals: The law does not distinguish between residential rental properties located in California and elsewhere. If you have one single-family home rental in California and five rental units out of state, you do not qualify for this exemption.
Commercial rentals: The exemption is based on ownership of residential rental units. Commercial units are not relevant to the unit or parcel count to qualify for the exemption.
Managed units: As a property owner, your eligibility for the exemption is based on the units and parcels that you own. The number of units you manage is not relevant to your exemption for the units that you own. For the units you manage, the maximum deposit that can be charged will depend on the status of each owner.
How Does the Law Affect Pet Deposits?
The new one-month limit is inclusive of all deposits, meaning pet deposits must also fall within this cap.
High Tide Property Management is Here to Help
Navigating new laws can feel like getting caught in a riptide. But don’t worry, High Tide Property Management is here to keep you afloat! We’re committed to helping self-managing property owners like you understand and adapt to these changes.
If you have any questions about how these changes might affect you or need help managing your properties, don’t hesitate to reach out. At High Tide Property Management, we’re always here to provide support and ensure smooth sailing for all your property management needs.
Catch the next wave with High Tide Property Management!