Residential tenancies: return of security.

Assembly Member Pellerin's legislation revises California's security deposit requirements for residential tenancies, establishing new protocols for returning deposits and communicating with tenants. The bill requires landlords to return security deposits by personal delivery or check, unless the deposit was initially received electronically, in which case it must be returned electronically to a tenant-designated account. For units with multiple adult tenants, deposits must be returned via a single check payable to all tenants, though alternative arrangements can be specified through mutual written agreement.

The measure introduces mandatory photographic documentation requirements, directing landlords to photograph rental units before new tenancies beginning July 2025 and to document property conditions before and after any repairs or cleaning that result in security deposit deductions. These photographs, along with detailed itemized statements and relevant invoices, must accompany all deductions exceeding $125 unless tenants explicitly waive this requirement.

For service members, the legislation adds protections against elevated security deposits based on credit history or housing records. Landlords charging higher deposits to service members must provide written justification and return any additional amounts after six months of timely rent payments. Small-scale landlords - defined as natural persons or qualifying LLCs owning no more than two properties with four or fewer units - may request up to two months' rent as security, except from service member tenants. The bill maintains existing statutory damages of up to twice the deposit amount for landlords who withhold deposits in bad faith.