AB414 - Residential tenancies: return of security.

Assembly Bill No. 414 CHAPTER 340 An act to amend Section 1950.5 of the Civil Code, relating to tenancy. [ Approved by Governor October 06, 2025. Filed with Secretary of State October 06, 2025. ] LEGISLATIVE COUNSEL'S DIGEST AB 414, Pellerin. Residential tenancies: return of security. Existing law regulates the terms and conditions of residential tenancies, including generally limiting the amount of security that a landlord may demand or receive to an amount or value equivalent to one month’s rent, as provided, and allowing a landlord to claim of the security only those amounts as are reasonably necessary for specified purposes. Existing law defines a security for these purposes as any payment, fee, deposit, or charge, including any payment, fee, deposit, or charge, except as specified, that is imposed at a tenancy’s beginning to reimburse a landlord for costs associated with processing a new tenant or that is imposed as an advance payment of rent, used for any purpose. Existing law requires a landlord to provide a tenant a copy of an itemized statement, as specified, and return the security’s remaining portion to the tenant by personal delivery or by first-class mail, postage prepaid, no later than 21 calendar days after the tenant has vacated the premises, as specified. Existing law authorizes a landlord and tenant to mutually agree to have the landlord deposit electronically the security’s remaining portion to a bank account or other financial institution designated by the tenant or provide a copy of the itemized statement to an email account provided by the tenant. This bill would revise these provisions to generally require the landlord to return the security by personal delivery or by check made payable to the tenant. If the landlord received the security or rental payments from the tenant electronically, the bill would instead require the landlord to return the remainder of the security electronically, as specified, unless the landlord and tenant designated another method of return, by written agreement. If the landlord received the security or rental payments from the tenant electronically, the bill would require the landlord to notify the tenant in writing of the tenant’s right to receive the security electronically pursuant to these provisions, as specified. The bill would also instead authorize the landlord and tenant to mutually agree, as specified, to provide the itemized statement by either email to an email account provided by the tenant or mail by first-class mail, postage prepaid, to an address provided by the tenant. If multiple adult tenants reside in the unit, the bill would require the landlord to return the remainder of the security by a check made payable to all adult tenants, as specified, and provide the itemized statement by personal delivery or first-class mail, postage prepaid, to any one of the adult tenants chosen by the landlord, unless the landlord and all adult tenants, at the commencement of the tenancy or at any time during or after the tenancy, enter into a mutual written agreement containing specified provisions. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 1950.5 of the Civil Code is amended to read: 1950.5. (a) This section applies to security for a rental agreement for residential property that is used as the dwelling of the tenant. (b) As used in this section, “security” means any payment, fee, deposit, or charge, including, but not limited to, any payment, fee, deposit, or charge, except as provided in Section 1950.6, that is imposed at the beginning of the tenancy to be used to reimburse the landlord for costs associated with processing a new tenant or that is imposed as an advance payment of rent, used or to be used for any purpose, including, but not limited to, any of the following: (1) The compensation of a landlord for a tenant’s default in the payment of rent. (2) The repair of damages to the premises, exclusive of ordinary wear and tear, caused by the tenant or by a guest or licensee of the tenant. (3) The cleaning of the premises upon termination of the tenancy necessary to return the unit to the same level of cleanliness it was in at the inception of the tenancy. The amendments to this paragraph enacted by the act adding this sentence shall apply only to tenancies for which the tenant’s right to occupy begins after January 1, 2003. (4) To remedy future defaults by the tenant in any obligation under the rental agreement to restore, replace, or return personal property or appurtenances, exclusive of ordinary wear and tear, if the security deposit is authorized to be applied thereto by the rental agreement. (c) (1) Except as provided in paragraph (2), (3), or (5), a landlord shall not demand or receive security, however denominated, in an amount or value in excess of an amount equal to one month’s rent, in addition to any rent for the first month paid on or before initial occupancy. (2) This subdivision does not prohibit an advance payment of not less than six months’ rent if the term of the lease is six months or longer. (3) This subdivision does not preclude a landlord and a tenant from entering into a mutual agreement for the landlord, at the request of the tenant and for a specified fee or charge, to make structural, decorative, furnishing, or other similar alterations, if the alterations are other than cleaning or repairing for which the landlord may charge the previous tenant as provided by subdivision (e). (4) On or after April 1, 2025, if a landlord or its agent charges a service member who rents residential property in which the service member will reside a higher than standard or advertised security pursuant to paragraph (1) due to the credit history, credit score, housing history, or other factor related to the tenant, the landlord shall provide the tenant with a written statement, on or before the date the lease is signed, of the amount of the higher security and an explanation why the higher security amount is being charged. The additional amount of security shall be returned to the tenant after no more than six months of residency if the tenant is not in arrears for any rent due during that period. The date for return of the additional amount of security shall be included in the lease agreement. For purposes of this paragraph, “service member” has the same meaning as in Section 400 of the Military and Veterans Code. (5) (A) Notwithstanding paragraph (1), a landlord shall not demand or receive security, however denominated, in an amount or value in excess of an amount equal to two months’ rent, in addition to any rent for the first month paid on or before initial occupancy if the landlord meets both of the following requirements: (i) The landlord is a natural person or a limited liability company in which all members are natural persons. (ii) The landlord owns no more than two residential rental properties that collectively include no more than four dwelling units offered for rent. (B) Subparagraph (A) shall not apply if the prospective tenant is a service member. A landlord shall not refuse to enter into a rental agreement for residential property with a prospective tenant who is a service member because this subparagraph prohibits the landlord from demanding or receiving a greater amount of security than that which is established in paragraph (1). For purposes of this subparagraph, “service member” has the same meaning as in Section 400 of the Military and Veterans Code. (C) For purposes of this paragraph: (i) “Natural person” includes any natural person who is a settlor or beneficiary of a family trust. (ii) “Family trust” means a revocable living trust or irrevocable trust in which the settlors and beneficiaries of the trust are persons who are related to each other as sibling, spouse, domestic partner, child, parent, grandparent, or grandchild. (6) This subdivision shall not apply to a security collected or demanded by the landlord before July 1, 2024. (d) Any security shall be held by the landlord for the tenant who is party to the lease or agreement. The claim of a tenant to the security shall be prior to the claim of any creditor of the landlord. (e) (1) Subject to paragraph (2), the landlord may claim of the security only those amounts as are reasonably necessary for the purposes specified in subdivision (b). (2) (A) The landlord shall not assert a claim against the tenant or the security for damages to the premises or any defective conditions that preexisted the tenancy, for ordinary wear and tear or the effects thereof, whether the wear and tear preexisted the tenancy or occurred during the tenancy, or for the cumulative effects of ordinary wear and tear occurring during any one or more tenancies. (B) Claims against the tenant or the security for materials or supplies and for work performed by a contractor, the landlord, or the landlord’s employee shall be limited to a reasonable amount necessary to restore the premises back to the condition it was in at the inception of the tenancy, exclusive of ordinary wear and tear. (C) The landlord shall not require a tenant to pay for, or assert a claim against the tenant or the security for, professional carpet cleaning or other professional cleaning services, unless reasonably necessary to return the premises to the condition it was in at the inception of tenancy, exclusive of ordinary wear and tear. (f) (1) Within a reasonable time after notification of either party’s intention to terminate the tenancy, or before the end of the lease term, the landlord shall notify the tenant in writing of the tenant’s option to request an initial inspection and of the tenant’s right to be present at the inspection. At a reasonable time, but no earlier than two weeks before the termination or the end of lease date, the landlord, or an agent of the landlord, shall, upon the request of the tenant, make an initial inspection of the premises prior to any final inspection the landlord makes after the tenant has vacated the premises. The purpose of the initial inspection shall be to allow the tenant an opportunity to remedy identified deficiencies, in a manner consistent with the rights and obligations of the parties under the rental agreement, in order to avoid deductions from the security. If a tenant chooses not to request an initial inspection, the duties of the landlord under this subdivision are discharged. If an inspection is requested, the parties shall attempt to schedule the inspection at a mutually acceptable date and time. The landlord shall give at least 48 hours’ prior written notice of the date and time of the inspection if either a mutual time is agreed upon, or if a mutually agreed time cannot be scheduled but the tenant still wishes an inspection. The tenant and landlord may agree to forgo the 48-hour prior written notice by both signing a written waiver. The landlord shall proceed with the inspection whether the tenant is present or not, unless the tenant previously withdrew their request for the inspection. Written notice by the landlord shall contain, in substantially the same form, the following: “State law permits former tenants to reclaim abandoned personal property left at the former address of the tenant, subject to certain conditions. You may or may not be able to reclaim property without incurring additional costs, depending on the cost of storing the property and the length of time before it is reclaimed. In general, these costs will be lower the sooner you contact your former landlord after being notified that property belonging to you was left behind after you moved out.” (2) Based on the inspection, the landlord shall give the tenant an itemized statement specifying repairs or cleanings that are proposed to be the basis of any deductions from the security the landlord intends to make pursuant to paragraphs (1) to (4), inclusive, of subdivision (b). This statement shall also include the texts of paragraphs (1) to (4), inclusive, of subdivision (b). The statement shall be given to the tenant, if the tenant is present for the inspection, or shall be left inside the premises. (3) The tenant shall have the opportunity during the period following the initial inspection until termination of the tenancy to remedy identified deficiencies, in a manner consistent with the rights and obligations of the parties under the rental agreement, in order to avoid deductions from the security. (4) Subject to paragraphs (5) and (6), if an initial inspection is conducted pursuant to this subdivision and, at the time of inspection, the premises do not contain tenant possessions that prevent the landlord from identifying repairs or cleanings due to the presence of those possessions, the landlord shall not use the security for deductions for repairs or cleanings that are not identified in the itemized statement described in paragraph (2). (5) Nothing in this subdivision shall prevent a landlord from using the security for deductions itemized in the statement provided for in paragraph (2) that were not cured by the tenant so long as the deductions are for damages authorized by this section. (6) Nothing in this subdivision shall prevent a landlord from using the security for any purpose specified in paragraphs (1) to (4), inclusive, of subdivision (b) that occurs between completion of the initial inspection when possession of the unit is returned to the landlord or that was not identified during the initial inspection due to the presence of a tenant’s possessions. (7) The requirements of this subdivision do not apply when the tenancy is terminated pursuant to subdivision (2), (3), or (4) of Section 1161 of the Code of Civil Procedure. (g) (1) For tenancies that begin on or after July 1, 2025, the landlord shall take photographs of the unit immediately before, or at the inception of, the tenancy. (2) Beginning April 1, 2025, the landlord shall take photographs of the unit within a reasonable time after the possession of the unit is returned to the landlord, but prior to any repairs or cleanings for which the landlord will make a deduction from or claim against the security deposit pursuant to this section, and shall also take photographs of the unit within a reasonable time after such repairs or cleanings are completed. (h) (1) No later than 21 calendar days after the tenant has vacated the premises, but not earlier than the time that either the landlord or the tenant provides a notice to terminate the tenancy under Section 1946 or 1946.1, Section 1161 of the Code of Civil Procedure, or not earlier than 60 calendar days prior to the expiration of a fixed-term lease, the landlord shall furnish the tenant, a copy of an itemized statement indicating the basis for, and the amount of, any security received and the disposition of the security, and shall return any remaining portion of the security t [Text truncated for display. Full text available on Congress.gov.]