Sacramento Report

Interest on Security Deposits and 60-Day Notice Legislation Still Alive at the State Capitol

by Debra Carlton

As the California Legislature nears the end of its two-year session, two “high profile” landlord-tenant bills have stuck it out to the end. The following is an overview of these two bills.

AB 2330 (D-Migden): Security Deposits—CAA Position: Oppose—While the bill has been significantly “watered down” since its introduction, it still contains a number of objectionable proposals. As initially introduced, it:

Allowed tenants to live rent-free if they made a claim with a local agency that the owner had retaliated against them;
Included an unacceptable definition of “ordinary wear and tear” as it related to the retention of security deposits;
Prohibited owners from charging a screening fee;
Prohibited owners from charging any other fee to process new tenants;
Increased the penalty for owners who, in bad faith, failed to return the security deposit to tenants;
Clarified the law with regard to cleaning, specifically stating that the property owner can use a portion of the security deposit to pay for the cleaning of the premises upon termination of the tenancy necessary to return the unit to the same level of cleanliness it was in at the inception of the tenancy;
Required owners to pay interest on security deposits; and
Required a six-step, walk-through process by the owner and the tenant near the end of the tenancy.

After making its way through all committees in the Assembly and the Senate, provisions 1, 2, and 3 above were removed from the bill. Of the provisions that remain, CAA members have expressed the most concern over provisions 6 and 7 above. CAA members have sent thousands of letters and made telephone calls to their representatives at the state capitol. As of this writing, all Republicans and many Democrats have expressed their concerns about the bill. The final vote will be cast before in late August. You can check CAA’s Web site for the results. Use our “Fastweb Code” number 1811 on caanet.org to get you quickly to the information you want.

SB1403(Kuehl):60-DayNotice—CAA Position: Support—As initially introduced, SB 1403 would have given a local city or county the ability to require rental property owners to provide tenants with a 60-Day Notice prior to terminating tenancies. This bill would have opened the door for future legislation that hands control of landlord-tenant laws over to local jurisdictions. It was also elevated in the governor’s office earlier this year when a northern California owner handed out 600 Thirty-Day Notices to the tenants in his single-family rental homes in Sacramento and Santa Rosa. CAA members understood the reality —this legislation was on a fast track to the governor, and he had indicated his willingness to sign the bill. When SB 1403 moved to the Assembly, Senator Kuehl introduced amendments to it, which made the bill more palatable to CAA members. As the bill now makes its way to the governor, it requires all owners in the state of California to give any tenant a 60-Day Notice prior to terminating the tenancy of a resident who has lived at the property for one year or longer.

At the same time, Senator Kuehl has agreed to write a letter to the Legislative Journal, a publication of the Senate and the Assembly, acknowledging the concerns expressed by the members of the California Apartment Association about the challenges that owners face when attempting to rid the property of a nuisance tenant. The Assembly Judiciary Committee has also agreed to host a forum on the existing law governing Three-Day Notices to Quit. If the governor signs this bill into law as anticipated, it will take effect January 1, 2003, and will sunset on January 1, 2006 (meaning the 60-day provisions will cease to exist after that time unless a new law is passed and signed by the governor). Check CAA’s Web site for an update and for particulars on other provisions included in this legislation.

Governor Gray Davis has until September 30, 2002, to sign or veto all legislation on his desk.

Breaking News: Governor Signs 60-Day-Notice Legislation:

On August 28, 2002, Governor Gray Davis signed SB 1403 (Kuehl), legislation that requires rental property owners in California to provide tenants a 60-Day Notice prior to terminating a tenancy. The 60-Day Notice will be required by the owner if the resident has been in the unit for one year or longer. Otherwise, a 30-Day Notice is still allowed. Existing three-day notice laws remain unchanged. This requirement will remain in effect until January 1, 2006.

SB 1403 also explicitly requires rental property owners to provide residents a written notice prior to entering the unit. This notice will be required except in the case of an emergency or when the resident has abandoned or surrendered the premises. Owners or their agents may provide the written notice to residents personally (at least twenty-four hours before entry) or by mail (at least six days before entry). As allowed under existing law, the owner can only enter during normal business hours unless the resident consents at the time of entry.

New forms and instruction materials will be available for CAA members in November in order to comply with these new provisions.

For a copy of the bill, which also includes provisions relating to forfeiture and the Ellis Act, go to CAA’s Web site caanet.org and type in the number 1813 at the “Fastweb” search section, and you will be taken directly to a summary and access to the bill.

Next month, we will bring you a complete overview of all the housing bills that will become law in 2003.

The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the SF Apartment Magazine.Debra L. Carltonis the Vice President of Policy and Research for the California Apartment Association and is CAA’s chief lobbyist. © Copyright 2002.