Understanding Rental Laws in California

When it comes to running a rental property, landlords in California have a lot of responsibilities and considerations to take into account. There are many rental laws in California that landlords should be aware of so they can avoid difficult tenants and serious legal implications. They range from your obligations while seeking a new tenant to how you care for the property throughout their tenancy.

Running your rental property according to the law ensures a pleasant renting experience for your tenants and a more profitable and compliant experience for you as a landlord. Not only does it ensure you won’t end up in the small claims court, but you’ll have a pleasant and productive relationship with your tenants over the long term.
 

Rent and Security Deposits

How often can you increase the rent?

Depending on whether your rental is a single-family residence or multi-family dictates certain restrictions on landlords in California, in terms of how often they can raise a tenant’s rent and by how much.

The Tenant Protection Act of California in 2019 states that you cannot raise the rent by more than 5% at any one time plus county CPI. You also cannot increase the rent more than once within 12 months.

Furthermore, you could be limited by other local regulations, depending on the city or county in which your property sits.

Is there a limit on security deposits?

There is a trend to charge at least one month’s rent as a security deposit but no more than two. It’s not because that’s what tenants are willing to pay. The amount you can charge as a security deposit in California is mandated by law.

Security deposits for unfurnished units cannot go above two months’ worth of rent. For furnished apartments, you can add an additional month’s rent for the security deposit, or three months in total.

Can you charge a separate cleaning fee or pet fee?

Landlords in California don’t generally charge cleaning fees or pet fees separate from the security deposit. All of those fees (if you decide to include them) should be incorporated as part of the security deposit amount. The total of your security deposit, cleaning fees, or pet fees cannot exceed the maximum-security deposit outlined in the previous section. You can, however, charge a separate monthly “pet rent” if your tenants keep pets. This must be outlined clearly in your rental agreement with the tenant.

When is it acceptable to retain the security deposit?

It’s entirely legal for you to retain some or all of the security deposit as a landlord, but you cannot charge tenants for any general wear and tear on the property that is a result of reasonable living within the unit. This is a very vague area, so lean on the side of being generous and not over deduct as you most likely will lose in small claims court since the system tends to favor renters.

If your tenants or their guests cause undue damage to the property, you can retain the security deposit, but only for the amount it costs you to repair the damage. You must provide itemized receipts of all repairs to the tenants to account for the full amount you retained from the security deposit. The deposit (whether partially or in its entirety) must be returned to the tenants within 21 calendar days after they leave the property.
 

Tenant Screening

Are criminal background checks allowed?

You are well within your rights to conduct a criminal background check on tenants but be warned that there are tight limits on the decisions you can make with the information you get.

If a tenant can prove that you sought a background check in a discriminatory manner (e.g., only background checking certain ethnicities), you could find yourself in legal trouble.

Additionally, you can only reject applicants if the results of the background check prove that taking them on as a tenant would potentially have negative business ramifications for you as a landlord.

It’s also worth noting that certain cities and areas in California, such as Oakland, have completely banned landlords from seeking information about an applicant’s criminal background.

Can you charge an application fee?

It’s permitted to charge an application fee for potential tenants. However, as of 2021, the maximum amount you can charge is $51. This increases slightly every year in line with the Consumer Price Index.
 

Anti-Discrimination Laws

Certain behaviors or decisions made by landlords in relation to their tenants fall under the Fair Housing Act of 1968. It includes legislation to protect tenants from being discriminated against by landlords based on factors such as race, sexual orientation, and disability, among others.

This includes prohibiting landlords from rejecting tenants based on these factors. The only reasons that a landlord can legitimately reject an applicant are due to bad credit, poor references from third parties, or past illegal activity relevant to their rental application.
 

Legal Landlord Duties

What do you have to disclose to tenants?

As a landlord, you have several obligations and duties to your tenants. One such obligation is disclosure of potential health hazards within the property, such as mold or if any pest control activities are ongoing or planned for the property.

Other Legal Landlord Duties in California

Your other legal duties include items such as:

• You are obliged to accept the first qualified application to the rental property.
• You must provide a copy of the rental agreement to the tenant within 15 days of reaching an agreement.
• You must disclose the items above, along with whether any of the tenant’s utility charges include shared fees for common areas.

Maintenance and Repairs

It’s your duty to keep the rental property in habitable condition, from when the tenants first move in right up until they leave. That includes making sure any necessary maintenance and repairs are conducted and absorbing the costs of those activities.

If you don’t, tenants are within their rights to use the “repair and deduct” concept. This involves carrying out the repairs themselves or hiring a professional and deducting the cost from their rent paid to you. However, this is limited to no more than one month’s worth of rent and can only be used twice within any 12 month period.
 

Rental Insurance Laws

California does not have any laws in place to enforce renter’s insurance on your tenants. However, you are allowed to add it to their rental agreement. This would mean mandating that a tenant has to hold their own insurance policy to cover any injuries, losses, or damage to the rental property.
 

How Genuine Property Management Helps Owners

There’s a lot that goes into being a good and law-abiding landlord in California. Even experienced landlords can make mistakes, sometimes, or struggle to manage the paperwork and obligations.

That’s why Genuine Property Management is committed to making your landlord experience as simple and easy as possible. Learn more about our services for tenant screening, rent collection, maintenance, insurance, and more. Get in touch today at (949) 209-9494.