California, one of the nation’s most unfriendly landlord states, has succeeded in passing even more legislation that tightens the reins on landlords. With a focus on increasing tenant rights, Governor Newsom approved three bills this past September, which will take effect in 2025.
These tenant-friendly bills were part of a larger bipartisan housing package that I won’t dive into at the moment. Instead, I’ll focus on a few components that have been added to the bottomless California bag of restrictive landlord-tenant laws – these are Assembly Bill (AB) 2801, AB 2747, and SB 611. I’ll also touch on legislation that didn’t pass, which includes a bill that would have required landlords to place tenant security deposits in interest-bearing accounts. With that said, let’s take a look at these pieces of legislation that are aimed at making life easier for renters who reside in California.
CA Legislation Enhances Tenant Rights While Disregarding Property Owner Interests
Although the following bills are not extreme or costly like previous legislation we’ve seen passed over the years, they do, however, add up to more hassle that a landlord will have to deal with.
Here’s the latest round of inconveniences:
- Assembly Bill 2747 – Reporting to Credit Bureaus: Effective April 1, 2025, this bill will require property owners to give tenants the opportunity to report their on-time rent payments to credit bureaus. This was previously only mandated for landlords of assisted housing developments, but will now apply to residential real property of more than 15 units. (Details on AB 2747)
- Assembly Bill 2801 – Photographic Evidence: Starting July 1, 2025, landlords must capture photographic evidence of a rental unit before a tenant moves in, after they move out, and before and after doing any repairs, as well as cleaning. These photographs and a security deposit disposition form, must be shared with the tenant. (Details on AB 2801)
- Senate Bill 611 – Fee Restrictions: Effective July 1, 2025, this bill will prohibit landlords from charging fees on rent payments made by check, fees for notices posted, or charging military tenants who may have to vacate without notice, more than the typical security deposit amount. (Details on SB 611)
Recent Unfriendly Landlord Laws CA Attempted to Pass
California, being one of the leaders of tenant protections, creates a significant number of bills to keep that theme going. However, the state is not always successful in its efforts, with some legislation seeing a pushback.
Whether this specific group of bills passed or not is not the issue, though. The problem is that landlords who own rentals in the state of California always run the risk of being slammed with a piece of legislation that will cut into their ROI and investing goals in any given year. Those who have been hit with new eviction laws that favor the tenant, know exactly what I’m talking about.
Now, let’s take a look at a few more CA bills that favor tenants over landlords, but didn’t pass or move forward:
- Assembly Bill 2187 – Office of Tenants’ Rights: The bill was created to establish an Office of Tenants’ Rights and Protections. Its main function would have been to build and maintain an up-to-date list of statewide tenant rights that would be a useful resource when a renter feels their rights have been violated.
- Assembly Bill 2785 – Security Deposit Interest: Landlords would have been required to deposit tenant security deposits into an interest-bearing account at a bank or other financial institution regulated by the state or federal government within 30 days of receiving the deposit. Once a tenant lease ends, landlords would be required to return the security deposit along with any accrued interest to the tenant.
- Assembly Bill 2216 – Pet Owner Rights: This one-sided bill would have prevented landlords from exercising their right to not allow pets in their properties. The following X post below sums it up well.
Assemblymember Matt Haney (D- SanFrancisco) introduced bill f/k/a AB 2216, which would bar property owners from inquiring about pets on applications, prohibit additional rent for pets, and limit pet deposits.
First of its kind legislation in the country. Of course, California. pic.twitter.com/sMDACCrv4u
— Nativ Collectiv LA (@thenativla) March 1, 2024
Excessive State Tenant Rights Undermine Landlords
Tenant rights laws can make life difficult for landlords, as well as reduce their ROI. As you may know, CA has created a large number of housing laws over the years where there’s really no regard for a landlord’s rights. This is the case in many states across the nation, including New York, New Jersey, and others, and why it’s so important to do your research in finding landlord-friendly states where the law is on the side of the property owner.
Related Articles:
- What You Need to Know About Landlord-Friendly States
- 5 Most Landlord-Friendly States for Real Estate Investors
As an example, when your property is located in a landlord-friendly state, if a tenant decides to stop paying rent and you would like to evict them, the process is fast and straightforward. In contrast, if this were to occur in a tenant-friendly state, the eviction process would be long and drawn out, with costly legal fees, all while the tenant sits in your property rent-free for months as you pay the mortgage yourself. It can end up being an expensive disaster that cuts into a property owner’s profits.
Invest in Landlord-Friendly States to Protect Your Profits
Seasoned landlords stay clear of tenant-friendly states. They know from experience these locations can cripple their income streams, ROI, and their ability to grow their portfolio. To avoid these areas, many investors simply don’t buy in their home state, but instead, set up camp in states that yield the best profits and landlord protections.
Investing out-of-state is typical, and why Texas and Missouri are locations that real estate investors are drawn to. These states provide great landlord protections, such as no rent caps and security deposit regulations that are reasonable, as well as eviction policies that favor the landlord.
Related Article: Long Distance Real Estate Investing – A Strategy for Wealth Building
If you’re interested in investing in a landlord-friendly state, feel free to contact Morris Invest. We provide new construction rental properties in states that protect a property owner’s rights, have a high demand for rentals, and are proven to be recession-proof. In addition to this, Morris Invest takes care of all the details, big and small – ranging from placing a tenant to assigning a property manager. We also help you source funding at lower than standard mortgage rates, provide support and education, and more.
For those who are serious about looking into investing in real estate, review the resources listed below to kick-start your journey:
- Morris Invest & SDIRA Program Overview
- Freedom Number Cheat Sheet
- 90-Day Financial Empowerment Bootcamp
- The Financial Freedom Academy
If you have questions regarding the landlord-friendly states we build in, or need direction on how to get started investing, schedule a free 30-minute call with the team at Morris Invest. In the meantime, take a moment to check out the video below that covers which states are the best for buying a rental property, and which locations you should stay away from:
