A recently passed legislative bill may save some renters their security deposits and force some property owners to hire additional move-out staff.
The bill that San Francisco Assemblymember Carole Migden drafted – AB 2330- was approved by Governor Gray Davis and filed by the Secretary of State on Sept. 29. The bill, which relates to landlord and tenant issues, contains two clauses that will have a significant effect on Isla Vista property owners, come move-out day. The first clause, introduced by the bill, gives tenants the right to request an inspection of their unit two weeks prior to moving out, at the property owner’s expense. After inspection, the property owner must give the tenant “an itemized list of potential deductions from the security,” the bill states. This allows tenants to maximize the amount of security deposit returned to them after they move.
Executive Director of Santa Barbara Rental Property Association Joan Brooks said larger property firms would probably need additional staff to compensate for the inspections prior to move-out, and to deal with the extensive paperwork involved.
“This bill isn’t going to have a huge impact on our smaller property owners who have just a couple of units, but when you’re dealing with hundreds and hundreds of units, it’s going to be extremely expensive and time consuming for large properties,” she said. “The more it costs to manage a particular property, the more rent will probably go up to cover that additional cost.”
The second significant clause changes the amount a landlord has to pay a tenant for bad faith deductions from a security deposit. AB 2330 amends a former bill – which had a maximum fine for landlords of $600 – to twice the amount of the tenant’s security deposit. A bad faith deduction includes charging a tenant for “defective conditions that preexisted the tenancy, for ordinary wear and tear, or the effects thereof,” the bill states.
Migden’s legislative assistant Michael Gottlieb said the term “bad faith” must meet a high standard.
“It’s the judge’s call in either small claims court or through a civil suit, but the landlord has to display a blatant lie or falsification in returning a tenant’s deposit for it to be considered bad faith,” he said.
Migden proposed the bill in response to a lawsuit filed by the Attorney General’s office in Orange County against Arnel Management Company, Gottlieb said.
“The company was systematically ripping off tenants by charging ridiculously high security deposits and not returning them and not giving any reasons for taking the deposit,” he said. “We’re talking millions of dollars worth of security deposits that Arnel was withholding from tenants for no good reason.”
State Assemblymember Hannah-Beth Jackson signed and supported the bill throughout its drafting. Jackson said the bill is highly relevant in a town like I.V. where tenants are the underdogs in tenant/landlord disputes.
“The goal is to clarify the law and provide protection for those renters who are frequently being overcharged,” she said. “The bill tries to level the playing field and gives tenants the right to challenge charges on their security deposit and to ensure that charges aren’t just being tacked on to incoming and outgoing tenants, who aren’t responsible for specific damages.”
Brooks said AB 2330 is going to hit property owners in I.V. especially hard because of the number of large apartment complexes in the community, along with the turnover in renters.
“It’s the mechanics involved in a large complex in Isla Vista, most tenants stay at one place for a year then move to another apartment in I.V. It’s typical of legislation to assume that one size fits all,” she said. “Sometimes I think that legislation gets past without the legislator having a clue about the impact it is going to cause.”
Initially, what Gottlieb called a “pretty radical bill” was drafted, which included a clause that would give the interest that landlords make from a tenant’s security deposit, back to the tenant. A security deposit is often placed into an interest bearing account, or in some cases even used by the landlord to purchase stocks or bonds. Once a tenant terminates their rental period, whether or not they receive their full security deposit, the property owner profits from the interest the deposit generated. The first draft of the bill that included this clause passed through the assembly, but failed when brought to the senate.
AB 2330 is among many state bills passed in the last few years that strengthen tenant’s rights in a political arena where laws are in the property owners’ favor, Gottlieb said. A bill passed last year limited the move-in fee a property owner could charge a tenant.
“Landlords were charging over $100 for move-in fees. Some [move-in fees] were legitimate, for example when a tenant applies for an apartment, sometimes the landlord will run a credit check on a person and charge them for the report, which is like $30,” Gottlieb said. “This bill limits the landlord, so they can only charge for the cost of the credit report and no other move-in charges.”
However, Brooks said that bills, such as the one passed last year, can create more problems than it solves.
“A lot of people are now charging for these credit reports who never did in the past,” she said.
Even so, supporters of tenants rights’ bills said they think the effects will be positive.
“This bill proved to have a fair and reasonable set of requirements, so I voted for it,” Jackson said. “We have to make sure that tenants have some sort of recourse. Hopefully, this bill will provide that recourse.”