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Local real estate agents and property managers react to California's new renter security deposit cap

SANTA BARBARA, California – In the future, almost all new rental contracts in California will be limited to one month's rent as a security deposit.

However, existing rental agreements that require a deposit of more than one month's rent are not affected by this.

Michelle King recently started her own property management company, connecting homeowners and renters and helping to ensure everything runs smoothly for both parties.

She says California Assembly Bill 12, which caps most security deposits at one month's rent, will help people in expensive areas like Santa Barbara.

“People don't have to come up with that much money just to get an apartment. You know, here in Santa Barbara, it can be expensive to rent. And so it really helps people who are, you know, entry-level and trying to make ends meet here,” says Michelle King, the owner of King and Company.

There is one important exception to this new law.

Landlords can charge a maximum of two months' rent as a security deposit if they do not own more than two rental properties with a total of no more than four units.

Luxury real estate agent Yawar Charlie says it's great that smaller family businesses that rely on rental income for their retirement plans are unaffected.

“The purpose of a security deposit of several months' rent is exactly what it sounds like. It is to protect the landlord in case their property is damaged. Given the cost of renovations and the cost of replacing furnished properties, a sofa or table can be quite expensive right now,” Charlie said.

Before this law came into force, landlords in California were allowed to charge up to two months' rent as a security deposit for unfurnished properties and up to three months' rent for furnished properties.

California Assembly Bill 12 treats unfurnished and furnished properties equally.

“The only feedback I've gotten so far has been from my clients who have luxury homes with high-end furnishings. So they're concerned about what to do. They think maybe one month wouldn't be enough to cover the damage to their entire beautiful home, interior design and all the furnishings,” said Michelle King.

If the damage exceeds the value of the deposit, landlords may charge additional fees at the end of a tenancy.

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