BILL ANALYSIS �
AB 1679
Page 1
Date of Hearing: March 20, 2012
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 1679 (Bonilla) - As Amended: March 15, 2012
PROPOSED CONSENT
SUBJECT : Landlord-Tenant: Security Deposits
KEY ISSUE : Should a landlord and tenant be permitted to
mutually agree to an electronic delivery of a security deposit
refund and itemized statement - and thereby avoid the need for
personal delivery or delivery by first class mail?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This common sense non-controversial bill permits a landlord to
return a security deposit through an electronic transfer and to
deliver an itemized statement indicating the basis for the
amount returned by electronic mail, if both the landlord and
tenant mutually agree to this form of delivery. Existing law
regulates the use of security deposits and requires a landlord
to return any refund of the security deposit to the tenant
within 21 days after the tenant has vacated the premises. The
security deposit must be accompanied with an itemized statement
indicating the basis for the amount of security deposit
returned. Existing law specifies that the security deposit and
itemized statement be returned to the tenant by personal
delivery or first-class mail. Today, of course, it is often
more convenient for both landlord and tenant to have the deposit
and statement returned electronically if the tenant is willing
to provide the landlord with an e-mail address and bank account
routing number. Arguably a landlord and tenant could agree to
electronic delivery if they so choose - and no doubt many do
without incident - but this bill would offer assurance to
landlords that if they use electronic delivery that they will
not be liable for failing to comply with existing law. This
bill is sponsored by the California Apartment Association.
There is no known opposition to the bill.
SUMMARY : Permits a landlord and tenant to mutually agree, as
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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.
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. (Code of Civil Procedure Section 1950.5 (a)-(e).)
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
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. (Code of Civil Procedure
Section 1950.5 (f).)
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
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security to the tenant. (Code of Civil Procedure Section
1950.5 (g).)
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 to 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
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.
ARGUMENTS IN SUPPORT : 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
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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.
REGISTERED SUPPORT / OPPOSITION :
Support
California Apartment Association (sponsor)
Opposition
None on file
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334