Proposed Legislation in California Could Limit High Security Deposits

A new bill proposed in the California legislature could put a stricter limit on security deposits. The aim of the bill is to make housing more accessible to lower-income families and individuals.

Many renters are finding themselves stuck in living situations that are unsafe, overcrowded, or unsatisfactory, and are unable to move. With California’s already skyrocketing rents, a large percentage of tenants struggle to make their monthly payment alone. Up to 50% of renters in the state are considered rent-burdened, meaning they spend more than 30% of their income on housing costs. Without additional savings, many tenants can’t afford a security deposit on a new apartment, so they’re forced to stay right where they’re at.

Currently in California, landlords and property owners can charge up to two months’ rent as a security deposit upon move-in, in addition to the lease payment. And that’s only for unfurnished units — a furnished unit can require as much as three months’ rent. This puts security deposits at some apartments as high as $10,000.

The result? Tenants who either take on debt to pay the deposit or remain in poor living conditions. This is why Matt Haney, a Democratic state assemblymember from San Francisco proposed a measure that would bring down high security deposits.

The new legislation, Assembly Bill 12, would cap security deposits at just one month’s rent for most single-family homes, apartments, and condos — the same limit that has already been imposed in a dozen other states, including New York, Alabama, and Delaware. The Bill passed the state Assembly last month and is now being considered in the Senate.

While the purpose of the bill is to help low-income renters gain access to more apartments, landlords are concerned that it will put them at risk, especially following years of eviction moratorium that have put financial stress on many property owners. High security deposits are used to help landlords accommodate higher-risk tenants, such as those with a low credit score or no credit history, or a history of evictions. With the new bill, landlords could face serious financial turmoil if a tenant damages a property or fails to pay rent.

Proponents of the bill point out that in these cases, landlords still have the option to recover costs in court. However, many mom-and-pop landlords may not have the resources to follow up legally following extensive property damage or unpaid rent.

Assembly Bill 12 is following along many other proposed legislations in California that lean in favor of the renter — the Tenant Protection Act and L.A.’s Right to Counsel Bill are also underway in the California and Los Angeles Legislature, providing additional rights and protections to tenants in the state.