Residential tenancies: return of security.

Assembly Member Pellerin's residential tenancy legislation revises California's security deposit requirements to modernize return procedures and enhance documentation standards. The bill modifies Civil Code Section 1950.5 to establish new protocols for returning deposits, particularly through electronic means.

Under the amended provisions, landlords must return security deposits within 21 days after tenants vacate, either by personal delivery or check. For tenancies where security deposits or rent were paid electronically, landlords must return deposits electronically to tenant-designated accounts unless alternative arrangements are mutually agreed upon in writing. The legislation requires landlords to notify tenants of their right to electronic return options before lease termination.

For units with multiple adult tenants, the bill mandates that security deposit returns be made payable to all tenants listed on the lease, unless a written agreement specifies different arrangements. Landlords must also document unit conditions through photographs taken at the start of new tenancies after July 1, 2025, and capture images before and after any repairs or cleaning that result in security deposit deductions. These photographs, along with detailed documentation of charges, must accompany the itemized statement of deductions provided to tenants.

The legislation maintains existing provisions regarding allowable deductions, inspection rights, and statutory damages for bad faith claims, while adding specific protections for service members regarding deposit amounts based on credit history or other non-rent factors. Property owners who are natural persons or qualifying LLCs with limited holdings retain the ability to require up to two months' rent as security, except for service member tenants.