Assembly Bill 12: Security Deposit Cap Effective Date: July 1st, 2024
Key Details
Security Deposit Cap: This new law caps security deposits at one month’s rent. Exclusions: Small landlords who own no more than two properties, with a maximum of four units, are exempt from the provisions of AB 12.
My Take: I created a YouTube video when this law was proposed, expressing that this bill is largely unnecessary. Most housing providers, including us, typically charge only one month’s rent as a security deposit. The primary exception has been for conditional approvals where we charge 1.5X the deposit if you are almost qualified.
Unintended Consequences: Unfortunately, this law hurts the very tenants it aims to protect. By capping deposits at one month, many housing providers, including us, have had to eliminate our conditional approval programs that allowed for slightly higher deposits for marginal credit risks. This means tenants with lower credit or income will have a harder time getting approved for housing.
New Rent Increase Limit Effective Date: August 1st, 2024
Key Details
Rent Increase Cap: Statewide limit on rent increases set at 5% plus the Consumer Price Index (CPI). Some properties are exempt (read the law for full details), but simply put, the cap only applies to 2+ unit buildings that are over 15 years old (homes/condos exempt, woo hoo!).
Current CPI Updates: The new CPI for San Diego is 3.6%, and for Orange County, it is 3.8%. This means rent increases are capped at 8.6% and 8.8% respectively.
Why This Matters?
Most people are used to charging 10%. Don’t do it after August 1st, 2024 or you can get into a lawsuit over a sub 2% error. It’s crucial to know these limits to avoid potential legal issues.
Understanding these new laws is essential to remain compliant and protect your assets.
Hiring a Property Management Company
If you have any questions related to these legal updates, feel free to schedule a call with my team.
We are here to help navigate these changes and answer any questions you might have.
Steve Welty
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