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New Security Deposit Law & “Flipper” Disclosure Law (Effective July 1, 2024)

Matt Haney July 5, 2024


New Security Deposit Law & “Flipper” Disclosure Law (Effective July 1, 2024)

As of July 1, 2024, two new laws take effect that are notable.  The first relates to security deposits for residential rentals, and the second is what many are referring to as the “Flipper Law”.


New Security Deposit Law (Effective July 1, 2024)

As of July 1, 2024, California has implemented a new law regarding security deposits for residential rentals. The key points are as follows:

  1. Limit on Security Deposits: Security deposits are now capped at one month’s rent. This applies to all rental units going forward, whether furnished or unfurnished.
  2. Small Landlord Exception: If the property owner qualifies as a “small” landlord (i.e., if the property owner is an individual or an LLC whose members are all individuals, and who owns no more than two residential rental properties that collectively include no more than four dwelling units offered for rent), they may collect a two-month security deposit. However, even small property owners must adhere to the one-month limit if the tenant is a service member.


“Flipper” Disclosure Law

This disclosure law applies to anyone who has owned a property for 18 months or less, not just investors or contractors. Here are the details:

  1. Applicability: The law covers residential properties with 1-4 units.
  2. Seller Obligations: If the seller accepts an offer within 18 months of acquiring the property and renovations or repairs were done by a contracted party, the seller must disclose the following to the buyer:
  • Any room additions
  • Structural modifications
  • Other alterations
  • Repairs
  • Copies of any permits obtained (or inform the buyer that the permits may be obtained through the third party and provide their contact information)
  • These disclosures may alternatively be disclosed as a list as given by the contractor to the seller.
  • For labor and material costs exceeding $500, the seller must disclose each contractor and their contact information.

Both the Transfer Disclosure Statement and the Seller Property Questionnaires were revised to include questions regarding this new law.


Additional New Laws:
  1. The new Wooden Balcony and Stairs Addendum (C.A.R. Form WBSA) should be provided by sellers who are selling a property that includes any building with 3 or more dwelling units with balconies, stairways, or other elevated elements. The addendum addresses inspection and repair requirements for apartment buildings and common interest developments.
  2. New stand-alone Insurance Contingency to protect buyers and allow all parties in a transaction more options for navigating the difficult insurance market.

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