The evolving landscape of rental legislation in California has garnered attention from both landlords and tenants, particularly within sought-after rental markets throughout Southern California. Assembly Bill 12 (AB 12) and Senate Bill 567 (SB 567) have introduced new provisions directly affecting landlords and their rental properties, making it imperative to remain informed about these developments. This article breaks down the latest modifications and provides landlords with insight into anticipated adjustments that are soon to come.

What shifts are ahead with AB 12?

In the past, landlords were able to demand up to two months’ rent for unfurnished units and three months’ rent for furnished units, however significant changes are here with a few exceptions, notably for military service members.  California Governor Gavin Newsom recently approved AB 12, restricting landlords from charging more than one month’s rent as a security deposit for unfurnished rental homes.  On the one hand, this may improve housing access for millions of potential renters, while on the other hand it triggers concerns to both landlords and tenants. 

Landlords who own no more than two residential rental properties, collectively including no more than four units for rent, are permitted to charge up to two months’ rent as a security deposit, pending they meet specific ownership criteria.  What’s important to note here is that these changes are scheduled to take effect on July 1, 2024, thus giving landlords time to adapt, as well as provide compliance aids and updated forms before its enforcement.

Potential impacts to consider

The primary intent behind AB 12 is to support and lift the financial strain on tenants, particularly those already facing financial hardship.  This bill aims to make housing more affordable and accessible for tenants, however it could also bring about stricter tenant screening and increased application fees, further exacerbating challenges for low-income or high-risk tenants.

For landlords, this new law introduces increased financial risk with a diminishing safety net against potential damages or unpaid rents.  This, in addition to already existing regulatory complexities, may impact individual small-scale landlords from property maintenance for new developments, potentially impacting future housing conditions. 

SB 567 Shifts in the Tenant Protection Act

SB 567 responds to the present challenges millions of California renters are facing and provides greater housing stability for more renter households. This bill, signed by Governor Newsom on September 30, 2023 has two additional impacts on tenants and landlords by strengthening the Tenant Protection Act of 2019, limiting rental hikes to 10 percent and preventing no-cause evictions.  This is particularly impactful for property owners intending substantial remodeling or personal occupancy now or in the near future.

Effective April 1, 2024, SB 567 adds additional “hurdles” to “no-fault just cause” evictions. It will require property owners or their relatives to occupy the property within 90 days and maintain residency for at least 12 months in order to avoid potential legal consequences, including potential lawsuits and reimbursement obligations to displaced tenants.

Before buying a property with the plan to remove the occupants and move in or before acting to move your family into one of your rental properties, we suggest contacting your attorney to understand all applicable laws, to avoid the risk of penalties in going about this wrong.

This blog post is written by an attorney at Cooper & Huber, LLP.  It is for general educational purposes only and is not intended as legal advice or a solicitation for services. If you have any questions regarding Assembly Bill 12 or Senate Bill 567 or need help navigating the various State, City or County regulations, please feel free to contact Cooper & Huber at info@chcounsel.com or (213) 423-1163. Cooper & Huber attorneys handle an array of personal and business law matters throughout California. 

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