BILL NUMBER: SB 482 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 25, 2007
INTRODUCED BY Senator Yee
FEBRUARY 22, 2007
An act to amend Section 1950.5 of , and to add Section
1950.55 to, the Civil Code, relating to residential tenancies.
LEGISLATIVE COUNSEL'S DIGEST
SB 482, as amended, Yee. Residential tenancies: security deposits.
Existing law limits the amount or value of security that a
landlord may demand or receive for residential property that is used
as the dwelling of the tenant to 2 months' rent for unfurnished
residential property and 3 months' rent for furnished property.
Existing law defines a "security" for purposes of these provisions to
include a payment, fee, deposit, or charge that is imposed at the
beginning of a tenancy to be used to reimburse the landlord for costs
associated with processing a new tenant or that is imposed as an
advance payment of rent, as specified. These provisions impose
various notice requirements on the landlord, require the landlord to
issue an itemized statement regarding the security and return the
remaining portion of the security to the tenant, and authorize a
tenant to make a request for documentation after receiving the
statement, as specified. The bad faith claim or retention of the
security or a portion thereof by the landlord or the landlord's
successor in interest in violation of these provisions may subject
the landlord to statutory damages of up to twice the amount of the
security, in addition to actual damages. Existing law also prohibits
a lease or rental agreement from containing any provision
characterizing any security as "nonrefundable."
This bill would revise the definition of a security to
additionally specify that it is imposed by a landlord. The bill would
authorize a tenant to purchase a bond or commercial insurance policy
to secure the performance of the terms and conditions of a rental
agreement, in lieu of posting a security deposit with the landlord.
The bill would provide that a tenant who purchases a bond or
commercial insurance policy would be afforded all the notice and
other rights provided pursuant to these provisions for security
deposits, and, for purposes of these provisions, that bond or
commercial insurance policy, excluding any premium paid for the bond
or commercial insurance policy, would be treated as a security. The
bill would provide that the premium paid for the bond or commercial
insurance policy, unlike a security deposit, could be characterized
as nonrefundable.
The bill would also create a comprehensive set of requirements
for surety bonds purchased in this connection. Among other things,
the bill would prohibit a landlord from requiring a surety bond or
from being required to accept one. The bill would require a surety to
refund payments made by an applicant under certain circumstances,
including if the parties do not enter a lease, and to provide certain
disclosures, and if the surety fails to comply with the bill's
requirements, the surety would forfeit the right to make a claim
against the purchaser of the bond. The bill would permit an applicant
or tenant to recover specified amounts and attorney's fees from the
landlord if the landlord requires the amount of the surety bond to be
in excess of certain limits. The bill would require that any claim
for damages be made against the tenant prior to seeking reimbursement
from the surety. The bill would require that any surety bond issued
in this connection be issued by a carrier admitted in this state.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1950.5 of the Civil Code is amended to read:
1950.5. (a) This section applies to security for a rental
agreement for residential property that is used as the dwelling of
the tenant.
(b) (1) As used in this section, "security" means any payment,
fee, deposit or charge, including, but not limited to, any payment,
fee, deposit, or charge, except as provided in Section 1950.6, that
is imposed at the beginning of the tenancy by a landlord to be used
to reimburse the landlord for costs associated with processing a new
tenant or that is imposed as an advance payment of rent, used or to
be used for any purpose, including, but not limited to, any of the
following:
(A) The compensation of a landlord for a tenant's default in the
payment of rent.
(B) The repair of damages to the premises, exclusive of ordinary
wear and tear, caused by the tenant or by a guest or licensee of the
tenant.
(C) The cleaning of the premises upon termination of the tenancy
necessary to return the unit to the same level of cleanliness it was
in at the inception of the tenancy. The amendments to this paragraph
enacted by the act adding this sentence shall apply only to tenancies
for which the tenant's right to occupy begins after January 1, 2003.
(D) To remedy future defaults by the tenant in any obligation
under the rental agreement to restore, replace, or return personal
property or appurtenances, exclusive of ordinary wear and tear, if
the security deposit is authorized to be applied thereto by the
rental agreement.
(2) A tenant may purchase a bond or commercial insurance policy to
secure the performance of the terms and conditions of a rental
agreement in lieu of posting a security deposit, with the landlord. A
tenant who purchases that bond or policy shall be entitled to all of
the notice and other rights provided by this section and, for
purposes of this section, the bond or policy, excluding any premium
paid for it, shall be treated as a security.
(c) A landlord may not demand or receive security, however
denominated, in an amount or value in excess of an amount equal to
two months' rent, in the case of unfurnished residential property,
and an amount equal to three months' rent, in the case of furnished
residential property, in addition to any rent for the first month
paid on or before initial occupancy.
This subdivision does not prohibit an advance payment of not less
than six months' rent if the term of the lease is six months or
longer.
This subdivision does not preclude a landlord and a tenant from
entering into a mutual agreement for the landlord, at the request of
the tenant and for a specified fee or charge, to make structural,
decorative, furnishing, or other similar alterations, if the
alterations are other than cleaning or repairing for which the
landlord may charge the previous tenant as provided by subdivision
(e).
(d) Any security shall be held by the landlord for the tenant who
is party to the lease or agreement. The claim of a tenant to the
security shall be prior to the claim of any creditor of the landlord.
(e) The landlord may claim of the security only those amounts as
are reasonably necessary for the purposes specified in paragraph (1)
of subdivision (b). The landlord may not assert a claim against the
tenant or the security for damages to the premises or any defective
conditions that preexisted the tenancy, for ordinary wear and tear or
the effects thereof, whether the wear and tear preexisted the
tenancy or occurred during the tenancy, or for the cumulative effects
of ordinary wear and tear occurring during any one or more
tenancies.
(f) (1) Within a reasonable time after notification of either
party's intention to terminate the tenancy, or before the end of the
lease term, the landlord shall notify the tenant in writing of his or
her option to request an initial inspection and of his or her right
to be present at the inspection. The requirements of this subdivision
do not apply when the tenancy is terminated pursuant to subdivision
(2), (3), or (4) of Section 1161 of the Code of Civil Procedure. At a
reasonable time, but no earlier than two weeks before the
termination or the end of lease date, the landlord, or an agent of
the landlord, shall, upon the request of the tenant, make an initial
inspection of the premises prior to any final inspection the landlord
makes after the tenant has vacated the premises. The purpose of the
initial inspection shall be to allow the tenant an opportunity to
remedy identified deficiencies, in a manner consistent with the
rights and obligations of the parties under the rental agreement, in
order to avoid deductions from the security. If a tenant chooses not
to request an initial inspection, the duties of the landlord under
this subdivision are discharged. If an inspection is requested, the
parties shall attempt to schedule the inspection at a mutually
acceptable date and time. The landlord shall give at least 48 hours'
prior written notice of the date and time of the inspection if either
a mutual time is agreed upon, or if a mutually agreed time cannot be
scheduled but the tenant still wishes an inspection. The tenant and
landlord may agree to forgo the 48-hour prior written notice by both
signing a written waiver. The landlord shall proceed with the
inspection whether the tenant is present or not, unless the tenant
previously withdrew his or her request for the inspection.
(2) Based on the inspection, the landlord shall give the tenant an
itemized statement specifying repairs or cleaning that are proposed
to be the basis of any deductions from the security the landlord
intends to make pursuant to subparagraphs (A) to (D), inclusive, of
paragraph (1) of subdivision (b). This statement shall also include
the texts of subparagraphs (A) to (D), inclusive, of paragraph (1) of
subdivision (b). The statement shall be given to the tenant, if the
tenant is present for the inspection, or shall be left inside the
premises.
(3) The tenant shall have the opportunity during the period
following the initial inspection until termination of the tenancy to
remedy identified deficiencies, in a manner consistent with the
rights and obligations of the parties under the rental agreement, in
order to avoid deductions from the security.
(4) Nothing in this subdivision shall prevent a landlord from
using the security for deductions itemized in the statement provided
for in paragraph (2) that were not cured by the tenant so long as the
deductions are for damages authorized by this section.
(5) Nothing in this subdivision shall prevent a landlord from
using the security for any purpose specified in subparagraphs (A) to
(D), inclusive, of paragraph (1) of subdivision (b) that occurs
between completion of the initial inspection and termination of the
tenancy or was not identified during the initial inspection due to
the presence of a tenant's possessions.
(g) (1) No later than 21 calendar days after the tenant has
vacated the premises, but not earlier than the time that either the
landlord or the tenant provides a notice to terminate the tenancy
under Section 1946 or 1946.1, Section 1161 of the Code of Civil
Procedure, or not earlier than 60 calendar days prior to the
expiration of a fixed-term lease, the landlord shall furnish the
tenant, by personal delivery or by first-class mail, postage prepaid,
a copy of an itemized statement indicating the basis for, and the
amount of, any security received and the disposition of the security
and shall return any remaining portion of the security to the tenant.
(2) Along with the itemized statement, the landlord shall also
include copies of documents showing charges incurred and deducted by
the landlord to repair or clean the premises, as follows:
(A) If the landlord or landlord's employee did the work, the
itemized statement shall reasonably describe the work performed. The
itemized statement shall include the time spent and the reasonable
hourly rate charged.
(B) If the landlord or landlord's employee did not do the work,
the landlord shall provide the tenant a copy of the bill, invoice, or
receipt supplied by the person or entity performing the work. The
itemized statement shall provide the tenant with the name, address,
and telephone number of the person or entity, if the bill, invoice,
or receipt does not include that information.
(C) If a deduction is made for materials or supplies, the landlord
shall provide a copy of the bill, invoice, or receipt. If a
particular material or supply item is purchased by the landlord on an
ongoing basis, the landlord may document the cost of the item by
providing a copy of a bill, invoice, receipt, vendor price list, or
other vendor document that reasonably documents the cost of the item
used in the repair or cleaning of the unit.
(3) If a repair to be done by the landlord or the landlord's
employee cannot reasonably be completed within 21 calendar days after
the tenant has vacated the premises, or if the documents from a
person or entity providing services, materials, or supplies are not
in the landlord's possession within 21 calendar days after the tenant
has vacated the premises, the landlord may deduct the amount of a
good faith estimate of the charges that will be incurred and provide
that estimate with the itemized statement. If the reason for the
estimate is because the documents from a person or entity providing
services, materials, or supplies are not in the landlord's
possession, the itemized statement shall include the name, address,
and telephone number of the person or entity. Within 14 calendar days
of completing the repair or receiving the documentation, the
landlord shall complete the requirements in paragraphs (1) and (2) in
the manner specified.
(4) The landlord need not comply with paragraph (2) or (3) if
either of the following apply:
(A) The deductions for repairs and cleaning together do not exceed
one hundred twenty-five dollars ($125).
(B) The tenant waived the rights specified in paragraphs (2) and
(3). The waiver shall only be effective if it is signed by the tenant
at the same time or after a notice to terminate a tenancy under
Section 1946 or 1946.1 has been given, a notice under Section 1161 of
the Code of Civil Procedure has been given, or no earlier than 60
calendar days prior to the expiration of a fixed-term lease. The
waiver shall substantially include the text of paragraph (2).
(5) Notwithstanding paragraph (4), the landlord shall comply with
paragraphs (2) and (3) when a tenant makes a request for
documentation within 14 calendar days after receiving the itemized
statement specified in paragraph (1). The landlord shall comply
within 14 calendar days after receiving the request from the tenant.
(6) Any mailings to the tenant pursuant to this subdivision shall
be sent to the address provided by the tenant. If the tenant does not
provide an address, mailings pursuant to this subdivision shall be
sent to the unit that has been vacated.
(h) Upon termination of the landlord's interest in the premises,
whether by sale, assignment, death, appointment of receiver or
otherwise, the landlord or the landlord's agent shall, within a
reasonable time, do one of the following acts, either of which shall
relieve the landlord of further liability with respect to the
security held:
(1) Transfer the portion of the security remaining after any
lawful deductions made under subdivision (e) to the landlord's
successor in interest. The landlord shall thereafter notify the
tenant by personal delivery or by first-class mail, postage prepaid,
of the transfer, of any claims made against the security, of the
amount of the security deposited, and of the names of the successors
in interest, their address, and their telephone number. If the notice
to the tenant is made by personal delivery, the tenant shall
acknowledge receipt of the notice and sign his or her name on the
landlord's copy of the notice.
(2) Return the portion of the security remaining after any lawful
deductions made under subdivision (e) to the tenant, together with an
accounting as provided in subdivision (g).
(i) Prior to the voluntary transfer of a landlord's interest in
the premises, the landlord shall deliver to the landlord's successor
in interest a written statement indicating the following:
(1) The security remaining after any lawful deductions are made.
(2) An itemization of any lawful deductions from any security
received.
(3) His or her election under paragraph (1) or (2) of subdivision
(h).
This subdivision does not affect the validity of title to the real
property transferred in violation of this subdivision.
(j) In the event of noncompliance with subdivision (h), the
landlord's successors in interest shall be jointly and severally
liable with the landlord for repayment of the security, or that
portion thereof to which the tenant is entitled, when and as provided
in subdivisions (e) and (g). A successor in interest of a landlord
may not require the tenant to post any security to replace that
amount not transferred to the tenant or successors in interest as
provided in subdivision (h), unless and until the successor in
interest first makes restitution of the initial security as provided
in paragraph (2) of subdivision (h) or provides the tenant with an
accounting as provided in subdivision (g).
This subdivision does not preclude a successor in interest from
recovering from the tenant compensatory damages that are in excess of
the security received from the landlord previously paid by the
tenant to the landlord.
Notwithstanding this subdivision, if, upon inquiry and reasonable
investigation, a landlord's successor in interest has a good faith
belief that the lawfully remaining security deposit is transferred to
him or her or returned to the tenant pursuant to subdivision (h), he
or she is not liable for damages as provided in subdivision (), or
any security not transferred pursuant to subdivision (h).
(k) Upon receipt of any portion of the security under paragraph
(1) of subdivision (h), the landlord's successors in interest shall
have all of the rights and obligations of a landlord holding the
security with respect to the security.
() The bad faith claim or retention by a landlord or the landlord'
s successors in interest of the security or any portion thereof in
violation of this section, or the bad faith demand of replacement
security in violation of subdivision (j), may subject the landlord or
the landlord's successors in interest to statutory damages of up to
twice the amount of the security, in addition to actual damages. The
court may award damages for bad faith whenever the facts warrant that
award, regardless of whether the injured party has specifically
requested relief. In any action under this section, the landlord or
the landlord's successors in interest shall have the burden of proof
as to the reasonableness of the amounts claimed or the authority
pursuant to this section to demand additional security deposits.
(m) (1) Except as otherwise provided in paragraph (2), a lease or
rental agreement may not contain any provision characterizing any
security imposed by the landlord as "nonrefundable."
(2) A premium paid for a bond or commercial insurance policy to
secure the performance of the terms and conditions of a rental
agreement may be characterized as "nonrefundable" in a lease or
rental agreement.
(n) Any action under this section may be maintained in small
claims court if the damages claimed, whether actual or statutory or
both, are within the jurisdictional amount allowed by Section 116.220
or 116.221 of the Code of Civil Procedure.
(o) Proof of the existence of and the amount of a security deposit
may be established by any credible evidence, including, but not
limited to, a canceled check, a receipt, a lease indicating the
requirement of a deposit as well as the amount, prior consistent
statements or actions of the landlord or tenant, or a statement under
penalty of perjury that satisfies the credibility requirements set
forth in Section 780 of the Evidence Code.
(p) The amendments to this section made during the 1985 portion of
the 1985-86 Regular Session of the Legislature that are set forth in
subdivision (e) are declaratory of existing law.
(q) The amendments to this section made during the 2003 portion of
the 2003-04 Regular Session of the Legislature that are set forth in
paragraph (1) of subdivision (f) are declaratory of existing law.
SEC. 2. Section 1950.55 is added to the
Civil Code , to read:
1950.55. (a) An applicant for tenancy may purchase a surety bond
to compensate a landlord for claims that are made pursuant to
subdivision (b) of Section 1950.5.
(b) The purchase of that surety bond does not expand or diminish
the requirements of 1950.5.
(c) A landlord shall not require an applicant for tenancy to
purchase a surety bond and shall not be required to offer or agree to
the purchase of a surety bond.
(d) Upon verification from the landlord, the surety shall refund
the payment that was made to the surety for the cost of the bond to
the applicant within five business days of the purchase of the bond
if any of the following are true:
(1) The landlord does not accept the surety bond.
(2) The surety bond is not in force at the time of the hiring.
(3) The applicant does not enter into a lease or rental agreement
with the prospective landlord.
(e) If an applicant for tenancy purchases a surety bond, the
aggregate amount of the surety bond shall not exceed the statutory
limits of a security deposit as prescribed in Section 1950.5.
(f) If a landlord consents to the purchase of a surety bond by the
applicant but requires the surety bond to be in an amount in excess
of the statutory limits of a security deposit as prescribed in
Section 1950.5, which is in addition to any rent for the first month
paid on or before the initial occupancy and except as provided in
Section 1950.6, the applicant or tenant shall recover from the
landlord up to three times the extra amount paid plus reasonable
attorney's fees.
(g) Prior to the purchase of a surety bond, the surety shall
disclose in writing to the applicant all of the following:
(1) Applicants are not required to purchase and landlords are not
required to offer or accept a surety bond.
(2) Payment for a surety bond is nonrefundable unless the payment
is refunded as required in subdivision (d).
(3) The surety bond is not insurance.
(4) The requirements of the surety bond are required to be
consistent with the provisions of Section 1950.5.
(5) Individuals that purchase the surety bond may be required to
reimburse the surety for amounts the surety pays to the landlord for
claims that are consistent with Section 1950.5.
(6) If a surety bond is purchased, the tenant is required to
comply with the rental or lease agreement and statutory and
decisional law.
(h) A tenant or applicant shall receive a copy of the surety bond
at the time of the purchase of the surety bond.
(i) A tenant shall pay all damages as defined in Section 1950.5 to
the landlord while in legal possession of the residential property
and, if the tenant fails to pay the landlord, the surety shall pay
the landlord.
(j) If the surety fails to comply with the requirements of this
section, the surety forfeits the right to make a claim against the
individual that purchased the surety bond.
(k) Except as provided in this section, a surety shall not,
directly or indirectly, make any other payment to a landlord.
(l) A landlord shall make a lawful claim for damages solely
against the tenant prior to seeking reimbursement for damages from
the surety bond.
(m) If a tenant pays for the damages directly to the landlord and
that payment fully satisfies the claim for damages, the landlord
shall not seek reimbursement from the surety bond.
(n) In any proceeding brought by the surety against the tenant or
a former tenant on a surety bond under this section, the tenant or
former tenant shall retain the defenses otherwise available in a
civil proceeding between a tenant and a landlord under this section
and damages may only be awarded to the surety to the extent that the
tenant would have been liable to the landlord under this section.
(o) If a landlord's interest in the leased premises is conveyed,
the successor shall accept the tenant's surety bond and the surety
bond shall remain in full force and effect.
(p) If a surety, in an action against the tenant, asserts a claim
under the surety bond without having a reasonable basis to assert the
claim, the court may grant the tenant or former tenant damages of up
to three times the amount claimed plus reasonable attorney's fees.
(q) A surety bond issued under this section may only be issued by
an admitted carrier licensed by the Department of Insurance.
(r) Any waiver of the provisions of this section is contrary to
public policy and is void and unenforceable.