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AB-2297 Tenancy: fee in lieu of a security deposit.(2021-2022)

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Date Published: 02/16/2022 09:00 PM
AB2297:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 2297

Introduced by Assembly Member Wicks

February 16, 2022

An act to add Section 1950.5.1 to the Civil Code, relating to tenancy.


LEGISLATIVE COUNSEL'S DIGEST


AB 2297, as introduced, Wicks. Tenancy: fee in lieu of a security deposit.
Existing law generally regulates security for a rental agreement for residential property that is used as the dwelling of the tenant. Existing law defines “security” for that purpose to mean a payment, fee, deposit, or charge that is imposed at the beginning of the tenancy to be used to reimburse the landlord for costs associated with processing a new tenant or that is imposed as an advance payment of rent, used or to be used for any purpose, as specified.
This bill, among other things, would require a landlord who offers a tenant or prospective tenant the option of paying a fee in lieu of a security deposit to take certain action, including offer the tenant or prospective tenant the option to instead pay a security deposit. The bill would authorize a tenant who accepts an offer to pay a fee in lieu of a security deposit to terminate the agreement to pay the fee in lieu of a security deposit at any time and to stop paying the fee if the tenant chooses to instead make a security deposit in the amount that the landlord offers to new tenants for substantially similar housing on the date the tenant chooses to make a security deposit instead of paying a fee in lieu of a security deposit. The bill would prohibit a landlord who collects a fee in lieu of a security deposit pursuant to the bill from submitting a claim for damages or rental debt, as defined, to a third party unless the landlord has given notice to the tenant of the claim for damages or rental debt no later than 30 days after the date the tenant surrendered possession of the dwelling. The bill would provide that a fee in lieu of a security deposit offered pursuant to the bill is not “security,” as defined in the provisions discussed above.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 1950.5.1 is added to the Civil Code, to read:

1950.5.1.
 (a) As used in this section, “rental debt” means unpaid rent or any other unpaid financial obligation of a tenant under the tenancy.
(b) A landlord who offers a tenant or prospective tenant the option of paying a fee in lieu of a security deposit shall do both of the following:
(1) (A) Offer the tenant or prospective tenant the option to instead pay a security deposit.
(B) A landlord shall not use a prospective tenant’s choice to pay a fee in lieu of a security deposit or make a security deposit as a criterion in the determination of whether to approve an application for occupancy.
(2) Offer the option of paying a fee in lieu of a security deposit to every prospective tenant unless the landlord chooses to cease offering the option of paying a fee in lieu of a security deposit for every prospective tenant.
(c) A tenant who accepts an offer to pay a fee in lieu of a security deposit may terminate the agreement to pay the fee in lieu of a security deposit at any time and stop paying the fee if the tenant chooses to instead make a security deposit in the amount that the landlord offers to new tenants for substantially similar housing on the date the tenant chooses to make a security deposit instead of paying a fee in lieu of a security deposit.
(d) At the time a landlord offers to a tenant the option of paying a fee in lieu of a security deposit, the landlord shall notify the tenant in writing of all of the following:
(1) The tenant has the option to instead make a security deposit.
(2) The tenant has the option to terminate the agreement to pay the fee in lieu of a security deposit and instead make a security deposit pursuant to subdivision (b).
(3) The charges associated with each option described in paragraphs (1) and (2).
(e) An agreement to pay a fee in lieu of a security deposit shall be in writing, signed by the landlord or the landlord’s legal representative and the tenant, and shall include all of the following items:
(1) The fee is being paid only to secure occupancy without a requirement of making a security deposit.
(2) The fee, unless otherwise specified, is not refundable.
(3) Payment of the fee, unless otherwise specified, does not eliminate, release, or otherwise limit the requirements of the lease, including that the tenant shall pay for all of the following:
(A) Rent as it becomes due.
(B) Damages for which the tenant is legally liable under the lease.
(C) Any other payment obligations pursuant to the lease.
(f) A fee in lieu of a security deposit shall be payable at the time, and in the same amount each time, that each rent payment is due during the lease.
(g) (1) A landlord who collects a fee in lieu of a security deposit pursuant to this section shall not submit a claim for damages or rental debt to a third party unless the landlord has given notice to the tenant of the claim for damages or rental debt no later than 30 days after the date the tenant surrendered possession of the dwelling.
(2) The notice described in paragraph (1) shall include a written description and itemized list of any damages and rental debt, including the dates that any rental debt payments were due.
(3) (A) If a tenant challenges a claim for damages or rental debt noticed pursuant to this subdivision, and that challenge results in a determination by the landlord or by a court that the notice contained incorrect information, the notice shall be deemed void for purposes of this subdivision, and the landlord shall not file a claim with a third party for the amounts of damages or rental debt that were successfully challenged.
(B) If a landlord has submitted a claim for damages or rental debt to a third party before the notice to the tenant was voided pursuant to this paragraph, the landlord shall withdraw the claim and return any payment from the third party.
(h) If a landlord who collects a fee in lieu of a security deposit pursuant to this section receives compensation from a third party for a tenant’s damages or rental debt pursuant to a claim of which the tenant was given proper notice pursuant to subdivision (g), both of the following shall apply:
(1) The landlord shall not seek or collect reimbursement from the tenant for the amount of compensation received.
(2) (A) A third party, if otherwise authorized by contract, may seek, on or before the date that is one year from the termination of the tenant’s occupancy, reimbursement from the tenant of only the amounts paid to the landlord plus reasonable administration costs, legal fees, and collection costs.
(B) A third party seeking reimbursement from the tenant pursuant to this paragraph shall include in the claim for reimbursement any evidence of damages or rental debt that the landlord submitted to the third party, any evidence of damage repair costs that the landlord submitted to the third party, and a copy of the settled claim that documents payments made by the third party to the landlord.
(C) In an action seeking reimbursement from the tenant commenced pursuant to this paragraph, a tenant shall be entitled to any defenses to payment against the third party as against the landlord.
(i) A fee in lieu of a security deposit offered pursuant to this section is not “security,” as defined in Section 1950.5.