This bill focuses on security deposits in landlord-tenant relationships and introduces several key changes to current law. Here’s a breakdown of its provisions:
Security Deposit Limits:
Landlords can no longer require more than one month's rent as a security deposit (down from two months' rent under current law).
Installment Payments:
Tenants can now pay the security deposit in installments (at least 6 months to complete), with payments due no more frequently than once per month. If a tenant misses an installment, a landlord can seek compensation through a civil action, but cannot evict or seek a judgment for possession based solely on the missed payment.
Return of Excess Deposits:
If a landlord wrongfully demands or retains an excessive security deposit, they must return the excess within 7 days after receiving a written demand from the tenant. Failure to do so could result in the landlord being liable for three times the excess amount.
Walk-Through Inspections:
Landlords must allow a walk-through inspection upon a tenant’s request to document damages beyond normal wear and tear. Landlords cannot retain any portion of the deposit for damage not documented during this inspection.
Retention of Security Deposits:
A landlord cannot retain part of the security deposit for damages that existed before the tenant moved in. If a landlord wants to keep part of the deposit, they must provide:
A written statement listing the reasons for retention.
Documentation supporting the claim.
Bad Faith Retention:
A landlord is deemed to be acting in bad faith if they retain a deposit:
Unreasonably exceeds actual damages (e.g., more than 125% of actual damages).
Without any actual cause.
For an unlawful, retaliatory, or discriminatory purpose.
Return of Deposit after Landlord’s Interest Ceases:
If a landlord sells the property or transfers ownership, the new owner must either:
Transfer the security deposit to the new owner, or
Return it to the tenant within 60 days after the landlord’s interest in the property ends.
Refund Process:
If a tenant's security deposit refund is returned to the landlord (e.g., because of an incorrect address), the landlord must hold the payment for one year and disburse it to the tenant within 3 business days after the tenant requests it.
Carpet and Painting Damage:
A landlord can only retain part of the deposit for carpet replacement or painting if there is substantial, irreparable damage beyond normal wear and tear. The landlord cannot claim carpet replacement costs if the carpet has not been replaced in the last 5 years before the tenant leaves.
This bill provides stronger protections for tenants, limits how much landlords can charge for security deposits, requires transparency in how deposits are used, and ensures tenants can challenge wrongful retention of deposit funds. It also creates a civil remedy for tenants if their rights under the bill are violated.
Summary
The bill amends and makes additions to existing law concerning
security deposits that tenants submit to landlords and the conditions under which a landlord may retain all or part of a security deposit.
For the purposes of security deposits, the bill expands the
definition of normal wear and tear and narrows the definition of tenant. Under current law, a landlord may not require a tenant to submit
a security deposit in an amount that exceeds the amount of 2 monthly rent payments. The bill changes this maximum to one monthly rent payment.
The bill requires a landlord to permit a tenant to pay a security
deposit in multiple installments of substantially equal amounts with installments due no more frequently than once a month over a period of at least 6 months. If a tenant fails to pay an installment, the landlord may seek compensation through a civil action. But a landlord may not terminate the tenancy or initiate an eviction action, and a court may not enter a judgment for possession, based on a tenant's failure to pay an installment.
A landlord that wrongfully demands and retains a security deposit
in an excessive amount must return the excess amount to the tenant within 7 days after receiving a written demand from the tenant. A landlord that fails to timely return the excess money is liable for 3 times the excess amount.
A landlord that refuses to allow a tenant to pay a security deposit
in installments violates the Rental Application Fairness Act, and the tenant harmed by the violation may recover damages as provided in existing law.
Under current law, a landlord may not retain a security deposit to
cover normal wear and tear and, if actual cause exists for retaining any portion of a security deposit, the landlord must provide the tenant:
•
A written statement listing the exact reasons for the retention (written statement); and
•
The difference between any sum deposited and the amount retained.
The bill states that a landlord may not retain a security deposit to
cover any damage or defective condition that preexisted the tenancy and that when the landlord delivers the written statement, the landlord must also deliver any relevant documentation in the landlord's possession or control.
The bill requires a landlord, upon a tenant's request, to provide the
tenant a walk-through inspection of the dwelling unit to identify in writing any damage or defective conditions that are beyond normal wear and tear and that did not preexist the tenancy. If a walk-through inspection of the dwelling unit occurs, the landlord may not retain any amount from the security deposit for damage or defective conditions that are not documented during the walk-through inspection.
A landlord wrongfully withholds a security deposit or any portion
of it if the landlord:
•
Fails to timely provide the written statement and all relevant documentation;
•
Provides a written statement that fails to list the exact reasons for retaining any portion of the security deposit; •
Fails to timely return the difference between any sum deposited and the amount retained; or
•
Retains a security deposit or any portion of it in bad faith.
A landlord retains a security deposit or any portion of it in bad
faith if the amount retained:
•
Unreasonably exceeds the amount of actual damages;
•
Is retained without actual cause;
•
Is an amount the landlord knew or should have known exceeded the actual damages; or
•
Is retained solely or in part for an unlawful, retaliatory, or discriminatory purpose.
A landlord retains an unreasonable amount if the amount retained
is 125% or greater than the actual damages.
In any court action brought by a tenant under the provisions of the
bill, the landlord bears the burden of proving the amount of actual damages the landlord incurred.
Under current law, upon cessation of a landlord's interest in a
dwelling unit, the person in possession of a tenant's security deposit must either transfer the security deposit to the landlord's successor in interest or return the security deposit to the tenant within a reasonable time. The bill states that this must be done within 60 days after cessation of the landlord's interest in the dwelling unit.
If a landlord's payment refunding a tenant's security deposit or any
portion of it is returned to the landlord, the landlord must hold the payment for at least one year after receiving it and must disburse the payment to the tenant within 3 business days upon the tenant's request.
A landlord does not have actual cause to retain any amount from
a security deposit for the replacement of carpet or painting unless there is substantial and irreparable damage that exceeds normal wear and tear and did not preexist the tenancy. If a landlord has actual cause, the landlord may retain only the minimum amount necessary to replace the carpet or to repaint in the area that is damaged. A landlord may not deem carpet substantially and irreparably damaged if it has not been replaced with new carpet within the 5 years preceding the termination of the lease or surrender of the premises.
