AB1248 - Hiring of real property: fees and charges.

Amended IN Assembly June 02, 2025 Amended IN Assembly March 24, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 1248 Introduced by Assembly Member Haney February 21, 2025 An act to add Section 1950.2 to the Civil Code, relating to civil law. LEGISLATIVE COUNSEL'S DIGEST AB 1248, as amended, Haney. Hiring of real property: fees and charges. Existing law regulates the hiring of real property and imposes various requirements on landlords relating to the application for, and leasing of, residential rental property. Existing law prohibits a landlord or its agent from charging a tenant a fee for serving, posting, or otherwise delivering a notice of termination of a hiring of residential property, as specified. Existing law also prohibits a landlord or its agent from charging a tenant any fee for payment by check for rent or security deposit, as provided. This bill would require, for new residential tenancies beginning on or after January 1, 2026, that a tenant only be obligated to pay rent and prescribed fees or charges, including, among other things, a security deposit and rent stabilization fees charged to a landlord and passed on to the tenant, as specified. The bill would require, for residential tenancies that began before January 1, 2026, that a tenant only be obligated to pay rent, the fees and charges described above, any fees or charges that were charged at the start of the tenancy, except as specified, and fees or charges for specified utilities, including the use of a ratio utility billing system, as defined, that meets specified criteria. The bill would require, for residential tenancies that began before, or beginning on or after, January 1, 2026, if a tenant is given a discount on rent or fees or charges in exchange for signing a rental agreement, that the rental agreement clearly state specified information about the amount and timing of the discount. The bill would provide that its provisions do not prevent a tenant from being charged for individually metered utilities if the rental agreement meets prescribed requirements. The This bill would require on or after April 1, 2026, a landlord or landlord’s agent who advertises, displays, or offers residential property for rent to include in any advertisement, display, or offer the price, including all required fees or charges, and a description of all available optional housing services, as defined, including the associated fees for each optional housing service. This bill would prohibit a landlord or landlord’s agent from using a ratio utility billing system to allocate, demand, or collect fees or charges from a tenant, except for fees or charges for water or sewer service, as provided. The bill would prohibit the landlord from charging any fee or charge other than required fees and charges, as defined, and fees or charges for optional housing services. This bill would also require that any payment received from, or on behalf of, a tenant be applied to rent, rental debt, and any outstanding fees in a specified order, and would prohibit late fees from being charged to a tenant whose only delinquency is attributable to nonpayment or late payment of a late fee. The bill would specify that a decrease in housing services, as defined, is an increase in rent. The bill would provide that a landlord or landlord’s agent who violates these provisions is liable to a tenant in a civil action for damages, including treble damages. The bill would provide that its provisions do not prevent a landlord from recovering damages otherwise permitted by law. The bill would establish a 4-year 3-year statute of limitations to bring an action under these provisions. The bill would provide that a waiver of its provisions is contrary to public policy and void, that the bill’s provisions do not preempt a local government from imposing additional requirements upon a landlord or providing greater protection to tenants, and that its void and unenforceable, and the bill’s provisions are severable. 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. The Legislature finds and declares all of the following: (a) It is essential that prospective and current tenants have a clear and complete understanding of the total monthly cost of renting a home. Traditionally, this has been accomplished by landlords advertising and charging a single amount for rent that covers all housing services provided to the tenant. (b) Instead of advertising and charging tenants a single amount for rent, some landlords break down the amount that tenants pay into smaller amounts, such as by charging an amount labeled “rent” plus various fees. Tenants may be surprised to be charged required fees on top of their rent, including “convenience fees” to pay rent online, broker fees, utility connectivity fees, and even so-called “January fees” charged for no clear reason at the beginning of a new calendar year. Sometimes these fees purport to cover services that the law requires landlords to provide, such as pest control fees despite the landlord’s obligation to maintain the rental unit pest-free. (c) By enhancing transparency and predictability in rental housing costs, this act seeks to promote housing stability, foster trust between tenants and landlords, and create a level playing field among landlords. SEC. 2. Section 1950.2 is added to the Civil Code, to read: 1950.2. (a) For the purposes of this section, the following definitions apply: (1) “Housing services” means all services provided by or on behalf of a landlord related or connected to the use, occupancy, or enjoyment of residential real property, or that are required to be provided by law or are a condition of tenancy in the residential real property, including, but not limited to, trash collection, electrical service, water service, sewer service, gas service, other utilities, elevator service, storage, parking, facilities, access to common areas, repairs, maintenance, heat, hot water, pest control, security, or any other benefits, privileges, or services, whether express or implied. (2) “Optional housing service” means a service including, but not limited to, a parking space, event space, storage space, use of a laundry machine, or similar, that is all of the following: (A) Not required to be provided by a residential landlord to a tenant by local, state, or other applicable law. (B) Not a condition of the tenancy, required by the landlord or landlord’s agent as subject to a required fee or charge, or offered as one of two or more options when selecting at least one of the options is required. (C) Freely selectable or rejectable by the tenant on an opt-in basis, with no adverse action or impact to the tenant. (D) Cancelable by the tenant with no more than 30 days’ notice to the landlord, with no adverse action or impact to the tenant. (E) Reasonably available to the tenant from a source other than the landlord or landlord’s agent. (F) Not within or physically connected to the tenant’s dwelling unit. (G) Not unilaterally cancelable by the landlord, unless the tenant has failed to pay the fee for 30 days past the due date or the landlord is no longer offering the service to all tenants. (3) “Ratio utility billing system” means the allocation of utilities including, but not limited to, trash, water, water heating, sewer, natural gas, liquid propane gas, electricity, or other utility costs to tenants through any billing method other than individual meters, submeters, or a flat fee. (4) “Required fee or charge” means a fee or charge that is required by the landlord or landlord’s agent to be paid to, or for the benefit of, the landlord or landlord’s agent for use or occupancy of the residential real property, for housing services, or as a condition of the tenancy. (b) On or after April 1, 2026, a landlord or landlord’s agent who advertises, displays, or offers residential property for rent shall include in any advertisement, display, or offer both of the following: (1) The price required to be paid to or for the benefit of the landlord or landlord’s agent for use or occupancy of the residential real property and housing services, or as a condition of the tenancy, including all required fees or charges, except as provided in subdivision (c). (A) The price shall be clear and conspicuous, and significantly more prominent in type size, color, and placement than the amount of any fee or charge included in the price. (B) For any dwelling unit where submeters are used to charge a tenant separately for water service pursuant to Chapter 2.5 (commencing with Section 1954.201), the price shall include the fee or charge for water service by providing the estimate of the monthly bill for water service described in subdivision (b) of Section 1954.204. (2) (A) A description of all available optional housing services and associated fees for each optional housing service. (B) The landlord or landlord’s agent shall not condition an offer to rent, a tenancy, or the terms of a tenancy on whether a tenant chooses any optional housing services or on whether the tenant later cancels any optional housing services. (c) A landlord or landlord’s agent may exclude both of the following fees or charges from the advertised, displayed, or offered price: (1) The amount of any refundable security or application screening fee, as provided in Sections 1950.5 and 1950.6, if it is clearly and conspicuously disclosed in all advertisements, displays, and offers and in the rental agreement. (2) Fees or charges for individually metered utilities that a tenant pays directly to a third-party utility provider pursuant to a contractual agreement between the tenant and the utility provider. (d) This section does not prevent a landlord from recovering a charge for lost key replacement or damages to the property caused by the tenant or the tenant’s guests or as otherwise permitted by law. (e) A landlord or landlord’s agent shall not use a ratio utility billing system to allocate, demand, or collect fees or charges, except for fees or charges for water or sewer service, as provided in subdivision (f). (f) A landlord or landlord’s agent shall not allocate, demand, or collect from a tenant fees or charges for water or sewer service through the use of a ratio utility billing system, unless all of the following requirements are met: (1) The fee or charge for water or sewer usage consists only of fees or charges assessed for the property by the water or sewer provider. (2) If common areas, landscape irrigation systems, or other areas under the control of the landlord are served by a master water meter that also provides water to dwelling units covered by this subdivision, the landlord or landlord’s agent shall deduct the greater of the following amounts before water or sewer costs are divided among the dwelling units: (A) Twenty percent of the total water or sewer bills. (B) The actual cost of water or sewer usage for all common areas, landscaping, and all other areas under the control of the landlord, if all common areas, landscaping, and all other areas under the control of the landlord are separately metered or submetered for water. (C) The actual cost of water or sewer usage for all landscaping plus 10 percent of the total water or sewer bills, if all water used for landscaping is separately metered or submetered and water used for other common areas or areas under the control of the landlord are not separately metered or submetered. (3) For new tenancies beginning on or after April 1, 2026: (A) The advertised, displayed, or offered price for a dwelling unit described in subdivision (b) includes the highest monthly cost of water or sewer charges over the prior 12 months or prior calendar year for the unit or for a unit of similar size on the property. (B) Before accepting any application fee, security deposit, or other payment from a prospective tenant, the landlord or landlord’s agent does both of the following: (i) Provides the prospective tenant a paper or electronic copy of the two most recent water or sewer bills for the property and identifies the amounts the prospective tenant would have paid for the dwelling unit’s share of those bills, except in the case of new construction if prior bills do not exist. (ii) Provides the prospective tenant a paper or electronic statement that describes all of the following: (I) The percentages of the water or sewer costs that are allocated to tenants and to the landlord, as described in paragraph (2) of subdivision (f). (II) The method or formula used to allocate water or sewer costs among tenants. (III) A statement that tenants may inspect any documents or information as provided in paragraphs (4) and (5). (C) The rental agreement clearly and conspicuously discloses the information described in subparagraphs (A) and (B). (4) Upon written request by a tenant or a tenant’s representative, the landlord permits a tenant or a tenant’s representative to inspect all water or sewer bills, the method or formula used to allocate water or sewer costs to dwelling units, and the percentages of the water or sewer costs that are allocated to dwelling units and to the landlord. The landlord is only required to comply with four requests per dwelling unit per 12-month period. (5) Upon written request by a tenant or a tenant’s representative, the landlord provides the total number of dwelling units billed each month and the number of bedrooms in each unit. (6) During the course of a tenancy, the landlord or landlord’s agent does not alter the percentage of water or sewer costs that are allocated between the landlord and the tenants or the method or formula used to allocate water or sewer costs to the tenant in a way that increases the tenant’s share of those costs. A change in the number of occupants of a tenant’s unit may result in a different cost to the tenant using a consistent formula. (7) The fee or charge to any tenant is not greater as a result of vacancy in a dwelling unit on the property or the presence of other tenants at the property who do not pay for water or sewer pursuant to this subdivision. (8) The use of a ratio utility billing system is not prohibited by local law. (9) The dwelling unit does not use submeters to charge a tenant separately for water service pursuant to Chapter 2.5 (commencing with Section 1954.201). (g) For dwelling units and tenancies subject to the gross rental rate increase limits of Section 1947.12, any new required fee or charge, new fee or charge for optional housing services that were previously provided in exchange for the tenant’s payment of rent, and any increases to a required or optional fee or charge shall, when combined with any other increases in the gross rental rate, comply with subdivision (a) of Section 1947.12. This subdivision is declarative of existing law. (1) A landlord or landlord’s agent may charge [Text truncated for display. Full text available on Congress.gov.]