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CityWatch, February 2003
By Wes Wellman

HAPPY NEW YEAR FROM SACRAMENTO

Assembly Bill 2330, a.k.a. The Migden Bill, was passed by the California Legislature last year and took effect January 1, 2003. This article will deal with provisions of the bill relating to Security Deposits.

The new law does the following:

1. Requires the owner to make an initial inspection of the property soon after getting notice from a tenant of his/ her intention to terminate the tenancy, allowing the tenant the right to be present during the inspection and requires the owner to give to the tenant an itemized statement specifying any deductions from the security deposit the landlord intends to make.

The statement must include specifically required language from the new security deposit law. ACTION will have forms available which include the mandated disclosures. The statement must be given to the tenant, if the tenant is present for the inspection, or must be left inside the premises. Failure to make the notification or make the inspection and report shall result in the landlord forfeiting any claim on the security deposit.

The purpose of the initial inspection is to allow the tenant an opportunity to remedy identified deficiencies in order to avoid deductions from the security.

If after an owner notifies the tenant of their right to have an initial inspection, the tenant does not request it, the owner is not required to perform an inspection until the tenant moves out.

2. Requires the landlord, within three weeks after the tenant has vacated the premises, to furnish the tenant, by personal delivery or by first-class mail, postage prepaid, to furnish the tenant with a copy of an itemized statement indicating the basis for, and the amount of, any security deposit received and the disposition of the security and must return any remaining portion of the security to the tenant. The owner may deduct for allowable charges in addition to those set forth in the initial statement given to the tenant if the additional items were not visible at the time of the inspection due to the tenants' furnishings.

3. Changes the amount of statutory damages that a court can award for a bad faith claim or retention of the security deposit from $600 to twice the amount of the security. This can be in addition to actual damages and can be awarded by a court regardless of whether the injured party has specifically requested relief.

4. Imposes new requirements relative to the transfer of security deposits upon the sale, assignment, death, appointment of receiver or otherwise by the owner or the owner's agent. This will be discusses in more detail next month.

It is recommended that on all new tenancies, an initial walk-through of the premises be conducted with the new tenant and a form be completed and signed by the owner and the tenant detailing the condition of the various components of the unit. This will assist the owner in satisfying the burden of proof required for any deductions from the security deposit upon the termination of the tenancy. ACTION has forms for this purpose.