BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1679
                                                                  Page  1

          CONCURRENCE IN SENATE AMENDMENTS
          AB 1679 (Bonilla)
          As Amended August 9, 2012
          Majority vote
           
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          |ASSEMBLY:  |78-0 |(March 26,      |SENATE: |39-0 |(August 20,    |
          |           |     |2012)           |        |     |2012)          |
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           Original Committee Reference:    JUD.  

           SUMMARY  :  Permits a landlord and tenant to mutually agree, as 
          specified, to have a security deposit returned to the tenant by 
          electronic transfer and to have any statement itemizing 
          deductions from the security deposit sent to the tenant by 
          electronic mail.  Specifically,  this bill  :  

          1)Permits a landlord and tenant, after either has provided 
            notice to terminate the tenancy, to agree to have the landlord 
            deposit any remaining portion of a security deposit 
            electronically into an account designated by the tenant. 

          2)Permits a landlord and tenant, after either has provided a 
            notice to terminate the tenancy, to agree to have the landlord 
            send a copy of a required itemized statement, along with any 
            required related documents, to an e-mail account provided by 
            the tenant.  

           The Senate amendments  incorporate changes proposed by AB 2521 
          (Blumenfield) for chaptering out purposes. 

           EXISTING LAW  :

          1)Regulates the purposes for which a renter's security deposit 
            may be used, including, but not limited to, compensating the 
            landlord for default on payment of rent, cleaning or repairing 
            rented property, exclusive of normal wear and tear, or 
            remedying future obligations under the rental agreement, as 
            specified.  

          2)Requires that 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 








                                                                  AB 1679
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            inspection of the premises and to be present at the inspection 
            and specifies when and how the initial and any final 
            inspection shall be conducted.  

          3)Requires that no later than 21 days after the tenant vacates 
            the premise, but not earlier than the time that either the 
            landlord or the tenant provides a notice to terminate the 
            tenancy, or not earlier than 60 days prior to the expiration 
            of a fixed-lease term, the landlord shall furnish the tenant, 
            by personal delivery or by first-class mail, postage prepaid, 
            a copy of an itemized statement including 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.  

           AS PASSED BY THE ASSEMBLY  , this bill was substantially similar 
          to the version approved by the Senate.
           
          FISCAL EFFECT  :  None

           COMMENTS  :  Existing law regulates the use of security deposits 
          and requires a landlord to return any unused portion of the 
          security deposit to the tenant within 21 days after the tenant 
          has vacated the premises.  In addition to refunding an 
          appropriate portion of the security deposit, the landlord must 
          provide the tenant with an itemized statement (along with any 
          receipts or other supporting documents) that indicates the basis 
          for the amount of security deposit returned.  Existing law 
          specifies that the security deposit and itemized statement shall 
          be returned to the tenant by personal delivery or first-class 
          mail.  Increasingly, however, many tenants and landlords prefer 
          to use electronic fund transfers to pay and receive rent; 
          therefore, it is not surprising that many would also prefer to 
          have security deposits returned in a similar fashion and to have 
          itemized statements returned by e-mail.  Moreover, electronic 
          fund transfers and e-mails can eliminate delays, for example, 
          where the tenant does not provide a forwarding address.  
          Arguably a landlord and tenant could already mutually agree to 
          electronic deposit and delivery - and no doubt many do so - but 
          this bill would offer assurance to landlords that, if they use 
          electronic delivery, they will not be liable for failing to 
          comply with existing law.

          This bill simply clarifies that a landlord or tenant may, if 
          they choose, mutually agree to the electronic deposit of any 








                                                                  AB 1679
                                                                  Page  3

          returned portion of the security deposit and, if they choose, to 
          have the required itemized statement and supporting documents 
          sent by e-mail.  Neither the landlord nor the tenant would be 
          able to require this method of deposit or delivery unilaterally. 
           To this end, the bill was recently amended to specify that the 
          agreement, if any, must be made after either the landlord or 
          tenant has provided notice to terminate the tenancy.  This will 
          ensure that such agreements do not become part of the lease or 
          rental agreement, which would effectively permit a landlord to 
          unilaterally require electronic delivery as a condition of the 
          lease. 

          According to the author, the "requirement to return a security 
          deposit by a physical check was first placed in statute decades 
          ago, long before the advent of modern technology, electronic 
          fund transfer options, and email.  Today, more tenants are 
          asking that rental property owners return any remaining security 
          deposit directly into their bank account.  This request is 
          consistent with the way in which many tenants already chose to 
          pay their rent - through an electronic fund transfer (EFT)."  
          "Requiring landlords to return a tenant's security deposit 
          through a physical check," the author contends, "significantly 
          slows down that return.  In addition, tenants often do not 
          provide a forwarding address in a timely manner, thereby further 
          delaying the return of their security deposit."  The author 
          believes that this bill will "bring California in line with 
          modern technology" by allowing landlords and tenants to use that 
          technology when it is mutually beneficial and convenient to do 
          so. 

           
          Analysis Prepared by  :    Thomas Clark / JUD. / (916) 319-2334 


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