A California Bill Would Cap Renters’ Security Deposits

As rents have soared in California, so have security deposits.

That’s because California law allows landlords to require up to the equivalent of three months’ rent from tenants as a security deposit. In San Francisco, where the median rent for a two-bedroom apartment is $3,961 a month, a tenant may have to deposit more than $10,000.

A bill moving through the State Legislature seeks to cap that cost, as part of a broader effort to make housing more affordable in California. According to one recent study, a lack of affordable housing is the primary reason for homelessness in California, a state with 12 percent of the U.S. population but 30 percent of the country’s homeless people.

Under rules established in 1977, landlords in the state can insist on the equivalent of two months’ rent as a security deposit for an unfurnished apartment, and three months’ rent for a furnished one. The new proposal would limit security deposits for all rental properties to no more than one month’s rent.

“It’s a huge burden for the over 17 million Californians that are renters,” Matt Haney, the assemblyman who wrote the bill, said of high security deposits. “I’ve met people who live in their cars or in shelters who actually work full time but can’t move into housing because they can’t afford the upfront cost.”

The median rent in California has risen 35 percent since 2000, while the median household income for the state’s renters has increased 6 percent, according to a legislative analysis of the bill. “Security deposit amounts have likewise seen a significant increase over the same period,” the analysis said.

Haney told me that he was inspired to introduce the legislation after meeting a janitor in his district, which encompasses the eastern half of San Francisco. The man was cramming into a one-bedroom apartment with his wife and two children. He could afford the monthly rent for a two-bedroom apartment, but not the thousands of dollars needed for the security deposit, application fees, and first and last month’s rent payable in advance, he said.

“There’s a lot we need to do to reduce the cost of housing for everyone,” Haney said. “But this is something we can do right now to bring a lot of relief.”

The bill, A.B. 12, easily passed the Assembly in May, and the State Senate is now considering it. Haney told me that more than 10 states, including New York, Massachusetts and Alabama, have similar caps.

The bill isn’t without its opponents. Several rental housing industry groups say the proposal could make it untenable for landlords to take on new tenants and could ultimately reduce the housing supply. Smaller owners in particular may pull their units off the market because they won’t be able to take on the risk without the financial offset, the groups say.

Debra Carlton, a spokeswoman for the California Apartment Association, a trade group that represents landlords, said that even the current security deposit limits did not always cover the damage that tenants left behind. And landlords sometimes have to spend thousands to evict tenants, she added.

“We understand the challenges tenants may have when it comes to coming up with a security deposit, but A.B. 12 is not the answer,” the association wrote in an opposition letter to Haney.

The Senate has until Sept. 14 to vote on the bill. If it passes, it would need Gov. Gavin Newsom’s signature to become law.

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They checked out Pride books in protest. It backfired.

Where we’re traveling

Today’s tip comes from Karen Benedict, who lives in San Diego. Karen recommends several stops along the Central Coast:

“I am a multigenerational native Californian. I was born in San Bernardino. We left when I was 4, and moved to Santa Barbara County, which includes Santa Ynez and Solvang (where we lived for seven years). I still love to visit the area and see the new shops in Solvang; the little red schoolhouse in Ballard; and, of course, the original Pea Soup Andersen’s in Buellton.”

Tell us about your favorite places to visit in California. Email your suggestions to [email protected]. We’ll be sharing more in upcoming editions of the newsletter.

Tell us

What do you love about summer in California? Barbecues, pool days, road trips? How do you celebrate the season?

And before you go, some good news

The New York Times published an article this year about a high school in Los Angeles that holds an annual rejection party for its seniors. Students shred their college rejection letters and embrace the fact that rejection is a part of life.

The Times later asked teenagers for their advice on getting over rejection. Their responses were heartfelt, thoughtful and genuinely useful. Here’s one of my favorites:

“I have realized that the best way for me to get over rejection is to cry about it. While it may not help me achieve anything, I always feel a sense of closure after a good long cry. Crying is my form of catharsis. By embracing the sadness, I am acknowledging the rejection. If I had pretended nothing was wrong, my bottled-up emotions would explode later. I don’t mind rejections as much as I used to. The rejections I have received have only made my successes more valuable.” — Naomi, San Jose