New California Laws: AB2801 & AB2747

Cadman Group is committed to staying on top of new laws and regulations that impact the income property industry. We keep both Cadman Group and all clients in compliance with current laws.

Recently, California implemented two new laws that have dramatically changed the relatively “normal” everyday process of multi-family management.

AB2801

This new law adds a twist to the way security deposits are issued, specifically as it relates to deductions for tenant-caused damages. While there are complexities to AB2801, there are essentially two main components that make up the first major revisions to the disposition of security deposits over the past decade. These components state:

● Photographs must be sent to recently vacated residents that have a deduction for damage from their security deposits. Where it used to be: “No invoices, no deduction, ” it is now, “No invoices AND photos, no deduction.” All this still must be completed within 21 days of a tenant vacating a unit.

● You can no longer deduct cleaning fees, such as carpet cleaning fees. California views the needs for basic cleaning of the unit/house and carpets as “normal wear and tear.” Fees incurred from this are not to be deducted from a tenant’s security deposit. While excessive cleaning requirements can be deducted, we recommend that basic cleaning fees not be deducted.

*Note: Cadman Group has already implemented these new processes into our move-out and rent-ready procedures.

AB2747

California now requires landlords to offer the option of having their positive rental payment information reported to at least one credit bureau. The law applies to multi-family buildings with 15 or more units, or to properties with 15 or fewer units if they are corporate-owned and the ownership entity owns more than one building. Please note this applies only to positive payment reporting (if a tenant is delinquent, there will be no report)! Tenants who choose to “opt-in” will be charged the cost of the service to report their positive payment. We have decided to offer such tenant reporting to every residential tenant.

Cadman Group has contracted with one of our AppFolio “stack” partners, Second Nature, to handle all such tenant reporting for tenants who “opt-in.” These tenants will be charged $5 for the reporting per month, and the charge will show in their tenant ledger (but the $5 payment will flow to Second Nature). There is no out-of-pocket cost to landlords or to Cadman Group.

If you have any questions about either of these new laws, please feel free to reach out!

Thank you.