California Laws for Rental Property Management

Property laws in California are extremely comprehensive and can be difficult to traverse, even for experts. It is important to remember that California Property Management Laws go hand in hand with Real Estate Laws and a working knowledge of both is mandatory.

Whether you are a property manager looking for information on property management licenses in California or a landlord seeking information on laws related to an increase in rent, you could definitely use some help. Here is a broad overview of some of the important aspects of these laws, as well as a handy guide to the official laws themselves.

Licensing Laws

For anyone stepping into managing a property on behalf of the owner, the first requirement is to have a property management license in California. The regulation (10131-b) clearly states that buying, selling, or leasing property without a license, is unlawful. To apply for the real estate license, the following criteria need to be met as per the California Property Management Laws:

• The applicant must be a minimum of 18 years of age
• Should be a US citizen
• Should have no criminal record
• Should have completed three college-level courses, as approved by the California Department of Real Estate, and should have passed the licensing exam

Rental Application Laws

While asking potential renters to apply for the property, the following aspects of the law need to be kept in mind:

• Tenant Screening Process – The laws of the Department of Fair Employment and Housing state that tenant applications cannot be denied on account of the following:
  • Ancestry
  • Race
  • Religion
  • Disability/Medical Conditions
  • Marital Status
  • Sex and gender identity
  • Sexual Orientation
• Screening Fee – Rental Application laws allow for the collection of a screening fee. The law, however, states that the “screening fee must cover out-of-pocket costs for tenant screening, such as screening reports. In no case shall the amount of the application screening fee charged by the landlord or his or her agent be greater than thirty dollars ($30) per applicant.” 

Security Deposit Laws

Security Deposit Laws define how much money the landlord can charge for a security deposit, how the money must be kept, and when the money must be returned to the tenant.

• Security Deposit Amount– The Legislative Code mandates that the security deposit cannot exceed the following:
  • More than two months’ rent for an unfurnished property
  • More than three months of rent for a furnished property

Additionally, section 1905.5-g-1 of the legislative code of California, mandates that any unused portion of the security deposit needs to be refunded within 21 days of the tenant vacating the premises. The landlord is, however, well within his rights to withhold part or all of the security deposit if there is unpaid rent or to account for cleaning or repair costs. The landlord has to provide an itemized receipt explaining how the funds were used. In the absence of a security deposit refund or the itemized receipt within a reasonable amount of time, the tenant can sue the landlord or property manager in the small claims court if the total amount is up to $10,000. 

Laws Related to Lease

Section 1946 of the legislative code states that both fixed-term, as well as month-to-month leases, are permitted. Any tenant who violates the lease needs to take corrective action within three business days, failing which a notice can be served to evict the property. Section 1946.7, however, mandates some exceptions where a lease may be terminated without any penalty, these include:

• If the tenant is the victim of a domestic violence
• Is starting active military duty
• The landlord is unable to maintain a habitable residence
• The landlord violates privacy

Laws Relating to Rent

California Rent Control Law of 2020, states that the annual rental increase is capped at 5% plus inflation, not exceeding a total of 10 percent. 

Some of the exemptions to the law, however, include:

• Buildings constructed in the last 15 years
• Condos and single-family homes, unless owned by a corporation or real estate investment trust
• Duplexes where the owner lives in one of the units

Laws About Landlord Responsibilities

Landlords have a number of legal responsibilities to their tenants. Some of them are listed below: 

• Ensure the property is fit for habitation – Section 1941 states that the landlord has to ensure that the property is fit for habitation. This would mean the property must have:
  • Well-maintained plumbing and gas facilities
  • Effective weather protection
  • Well-maintained heating, lighting, and electrical systems
  • Grounds that are sanitary and kept free from debris 
  • Well-maintained floors, stairways and railings
• Ensure the right to access isn’t abused – The tenant’s right to quiet enjoyment means that the landlord cannot enter the premises except:
  • In case of an emergency
  • To make necessary or agreed repairs
  • When the tenant has abandoned or surrendered the premises
  • Pursuant to court orders
  • The landlord cannot abuse or use the right of access to harass the tenant.

In most cases, the landlord or property manager must provide reasonable notice in writing of their intent to enter. Entry is only permitted during regular business hours. If a landlord fails to give reasonable notice or attempts to enter outside of business hours, the tenant is well within his rights to refuse entry (1954). 

You can refer to the Property Management Laws on the official website for California Legislative Information at https://leginfo.legislature.ca.gov/, here are various codes for easy access:

The Bottom Line

In California, property management laws are complex, even for experts. So, it becomes crucial to understand both Property Management and Real Estate Laws. Working on these laws can be challenging if you’re a property manager or a landlord. It’s essential to have a firm grasp of these rules to ensure a smooth and lawful property management experience.

For any other assistance on property management, you can contact us at BFPM.