The California Assembly Judiciary Committee on Tuesday approved a bill proposing new regulations for how landlords manage security deposits, while also seeking to introduce new limits on tenant screening fees. The bill now heads to the floor of Congress after its drafters agreed to make several important amendments.
congressman laurie wilson
As it stands, AB 2785 by Rep. Lori D. Wilson, D-Suisun, would cap rental application fees at $50. The cap represents a significant change from current law, which adjusts fee caps based on the Consumer Price Index (CPI). The proposed cap is a significant departure from a 1996 law sponsored by the California Apartment Association that originally set the screening fee at $30 and included provisions for CPI adjustments.
Additionally, the bill provides that applicants who are not selected by the landlord must receive a full refund of these application fees. The current version of AB 2785 also requires landlords to deposit these deposits into an interest-bearing account with a state or federally regulated financial institution within 30 days of receiving them, and to repay any unpaid interest to the tenant at the time of tenancy. Masu. end.
CAA Staff Attorney Enbert P. Madison, Jr. testified in opposition to the bill, which protects property owners from undue financial burden and ensures continued availability of rental housing in the state. emphasized the need. He noted that the response to such a legislative mandate would be an increase in rents.
Mr. Madison mentioned the bill’s requirement to refund application fees to applicants who are not granted occupancy.
“Here’s the problem,” Madison said. “Applicants may fill out an application, only to find out they have thousands of dollars in credit card debt, unpaid child support, or just some coincidence in their lives. Unfortunately, once you run that application, the landlord won’t be able to get back the money they spent.
Regarding the current system of setting maximum fees, Maddison argued that “costs increase over time, so capping CPI is prudent.” Landlords cannot profit from screening fees. Current law only allows recovery of costs associated with processing these applications. ”
enbert madison
Regarding security deposit requirements, Mr. Wilson amended the bill to make depositing deposits in interest-bearing accounts optional rather than mandatory. With this change, landlords will only have to return unused security deposits if no interest is accrued.
Mr Maddison confirmed the change, but including the inclusion of a 1% administration fee to cover the administrative costs that landlords pay when they have to return bank fees, taxes and interest earned on rental homes to tenants. We also requested the authors to consider this. Interest-bearing account.
During the hearing, Mr. Wilson emphasized his willingness to work with opposition parties to further refine the bill. “We have also had frequent discussions with the opposition parties,” she said. “It is important that we continue the dialogue on this bill. My goal is to find a consensus that everyone can agree on and get everyone on the same page.”
AB 2785 is part of a broader legislative movement in California focused on tenant financial responsibilities beyond paying rent. The movement includes last year’s AB 12, authored by San Francisco Democratic Rep. Matt Haney. AB 12 limits deposits for both furnished and unfurnished units to one month’s rent, a change from the previous limit of two months’ rent. The law provides an exemption for small owners who own up to two rental units with a total of up to four rental units.
