BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 603|
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THIRD READING
Bill No: SB 603
Author: Leno (D)
Amended: 5/24/13
Vote: 21
SENATE JUDICIARY COMMITTEE : 4-1, 5/7/13
AYES: Evans, Corbett, Leno, Monning
NOES: Anderson
NO VOTE RECORDED: Walters, Jackson
SUBJECT : Landlord and tenant: security deposit
SOURCE : California Rural Legal Assistance
Tenants Together
Western Center on Law and Poverty
DIGEST : This bill mandates a statutory damage equal to the
amount withheld from a deposit when a landlord improperly
withholds any portion of a deposit, regardless of a showing of
bad faith.
Senate Floor Amendments of 5/24/13 eliminate the requirements
that a landlord (1) pay tenants interest based on security
deposits, and (2) keep security deposits in a separate,
federally-insured account.
ANALYSIS :
Existing law:
CONTINUED
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1. Regulates the landlord-tenant relationship, including the
return of any security deposit provided by the tenant.
2. Permits the landlord to only claim amounts from that deposit
which are reasonably necessary for specified purposes. Those
purposes include compensating for a tenant's default in
payment of rent, repair of damages to the premises (exclusive
of ordinary wear and tear), and cleaning the premises, as
specified.
3. Provides that no later than 21 calendar days after the tenant
has vacated the premises, as specified, the landlord shall
furnish the tenant with 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.
4. Provides that the bad faith withholding of a security deposit
subjects the landlord to statutory damages of up to twice the
amount of the security deposit, in addition to actual
damages. In any action for recovery of the security, the
landlord has the burden of proof as to the reasonableness of
the amounts claimed.
This bill mandates that a court award statutory damages of not
less than the amount of the security deposit which was withheld,
if a tenant shows that a landlord improperly withheld all or a
portion of a security deposit.
Background
California law regulates various aspects of the relationship
between residential landlords and tenants, including the
collection and return of the security deposit. Those deposits
cannot be greater than two months' rent for unfurnished
properties, or three months' rent for furnished residential
properties. Landlords are only allowed to claim amounts from
the security that are reasonably necessary for specified
purposes (such as repairing damages exclusive of ordinary wear
and tear), and must return any remaining portion of the deposit
within 21 days after the tenant has vacated the premises.
AB 2330 (Midgen, Chapter 1061, Statutes of 2002) further
protects tenant's rights by requiring a landlord to notify the
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tenant in writing of the tenant's option to request an initial
inspection upon notice of the termination of a lease and the
tenant's right to be present at the inspection. That bill also
provided that a tenant must have the opportunity to remedy
identified deficiencies, as specified, during the period
following the initial inspection until the end of the tenancy.
That bill changed the amount of statutory damages for bad faith
violations from $600 to twice the amount of the security.
Despite laws outlining how security deposits should be managed,
the Department of Consumer Affairs notes that "[t]he most common
disagreement between landlords and tenants is over the refund of
the tenant's security deposit after the tenant has moved out of
the rental unit."
Prior legislation
AB 2330 (Migden, Chapter 1061, Statutes of 2002) among other
provisions, redefined security, required specified landlords to
notify tenants of their option to request an initial inspection
and the tenant's right to be present at the inspection. The
bill changed the amount of statutory damages for certain
violations from $600 to twice the amount of the security.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 5/28/13)
California Rural Legal Assistance (co-source)
Tenants Together (co-source)
Western Center on Law and Poverty (co-source)
Asian Law Caucus
Bet Tzedek Legal Services
California Alliance for Retired Americans
California Reinvestment Coalition
Causa Justa :: Just Cause
Coalition for Economic Survival
Courage Campaign
Eviction Defense Collaborative
Housing and Economic Rights Advocates
Housing Rights Committee of San Francisco
Isla Vista Tenants Union
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Law Foundation of Silicon Valley
National Housing Law Project
Santa Barbara Rental Housing Roundtable
Santa Monicans for Renters' Rights
Tenderloin Housing Clinic
Unite Here
OPPOSITION : (Verified 5/28/13)
Apartment Association, California Southern Cities
Apartment Association Greater Los Angeles
Apartment Association Orange County
California Apartment Association
California Association of Realtors
East Bay Rental Housing Association
Leading Age California
Lighthouse Commercial Property Management
NorCal Rental Property Association
Ramirez Residential Properties, LLC
San Diego County Apartment Association
Santa Barbara Rental Property Association
ARGUMENTS IN SUPPORT : According to the author's office, it is
difficult for pro se tenants in small claims court to establish
bad faith. As the plaintiff, the tenant has the burden of proof
in showing the landlord acted in bad faith. Because of this,
many landlords routinely keep deposits or make questionable
deductions, calculating that the worst that could happen is that
a tenant will take the time and energy to go to small claims
court, and at that point, the landlord will have to return the
deposit, but nothing further as bad faith cannot be shown, or,
even if it is, the court declines to impose the penalty.
ARGUMENTS IN OPPOSITION : The California Apartment Association
argues that "by requiring judges to award mandatory penalties
for any de minimis error, SB 603 would create a very strong
incentive for every tenant to sue property owners."
AL:d 5/28/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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