California Property Management Laws: AB 1482, Deposits, Just Cause

California property management laws require anyone who manages rental property for compensation to hold a real estate broker license, and layer on top of that a dense set of rules covering rent increases, evictions, security deposits, trust funds, habitability, disclosures, fair housing, tenant screening, and recordkeeping. Miss one and the owner can face fines, license discipline, or a lawsuit. The sections below walk through each obligation a manager needs to meet.

Who Needs a License

Managing rental property for compensation in California without a real estate broker license is illegal. The Business and Professions Code treats renting units, collecting rent, and negotiating lease terms as real estate activities that require licensure.¹ There is no separate property management license. A licensed salesperson can perform these tasks only under the direct supervision of a broker.

A few people are exempt. Owners managing their own units do not need a license. Resident managers of apartment buildings and complexes are exempt, along with employees of those resident managers.² Employees of a licensed broker can show available units, but they cannot negotiate lease terms or collect rent on their own. Performing licensed activity without the credential invites fines and discipline from the Department of Real Estate.

Rent Increase Caps Under AB 1482

For units covered by the Tenant Protection Act, annual rent increases cannot exceed the lower of 5% plus the local Consumer Price Index change, or 10% total.³ The CPI varies by region, so the actual cap depends on where the property sits. The cap applies whether the tenant is on a month-to-month agreement or a longer lease.

Not every rental is covered. The main exemptions:

New construction, meaning buildings completed within the last 15 years on a rolling basis.
Owner-occupied duplexes where the owner has lived in one unit for the entire tenancy.
Single-family homes and condos, but only if the property is not owned by a corporation, real estate trust, or LLC with a corporate member, and the landlord has given the tenant the required written notice that the unit is not subject to AB 1482.
Deed-restricted affordable housing for low- or moderate-income households.

A manager handling a mixed portfolio needs to track coverage unit by unit. Applying the cap wrong, in either direction, creates exposure.

Just Cause Eviction

Once a tenant has continuously occupied a covered unit for 12 months, the landlord cannot end the tenancy without stating a legally recognized reason in the written termination notice.⁴ At-fault grounds include nonpayment of rent, lease breach, and criminal activity. No-fault grounds include the owner moving in, substantial remodeling that requires vacancy, and withdrawal of the unit from the rental market. When the termination is no-fault, the tenant is generally entitled to relocation assistance equal to one month’s rent, or a waiver of the final month’s rent.

Serving a termination notice without just cause on a covered unit opens the owner to a wrongful eviction claim.

Security Deposit Limits and the 21-Day Return

Since July 1, 2024, the maximum security deposit for most California rentals is one month’s rent, furnished or unfurnished.⁵ A narrow small-landlord exception allows up to two months’ rent for owners of no more than two residential rental properties totaling no more than four units, but only when the owner is a natural person or an LLC whose members are all natural persons. The exception does not apply when the tenant is a military service member.⁶

Within 21 calendar days after the tenant moves out, the landlord must either return the full deposit or send an itemized statement with every deduction and the remaining balance. Allowable deductions are limited to unpaid rent, cleaning the unit back to its move-in condition, and repairing damage beyond normal wear and tear.⁵ When total deductions reach $125 or more, the statement must include detailed explanations, with copies of bills for outside work or a breakdown of time and hourly rate for work the landlord did personally. Missing the deadline or the documentation lets the tenant sue in small claims for up to twice the deposit as a penalty.

Trust Account Handling

A broker who collects money for owners or tenants must keep those funds entirely separate from personal or business operating accounts. Client funds go into a designated trust account at a bank, into a neutral escrow depository, or directly to the owner within three business days of receipt.⁷ That covers security deposits, collected rents, and any other money received managing the property.

Commingling is serious. Mixing tenant funds with the broker’s own money can bring license suspension or revocation. The account must be in the broker’s name (or the broker’s licensed fictitious business name) as trustee, and generally cannot be an interest-bearing account that lets the bank require advance notice before withdrawals. The Department of Real Estate audits trust accounts and treats discrepancies as grounds for discipline.

Habitability

Every residential landlord is bound by the implied warranty of habitability for the entire tenancy. No lease provision can waive it.⁸ The unit must have:

Weatherproof roof and exterior walls, with unbroken windows and doors.
Working plumbing connected to a sewage disposal system, with hot and cold running water.
Functional heating in good working order.
Safe wiring, lighting, and electrical equipment in good working order.

These minimums come from Civil Code Section 1941.1.⁹ A tenant who can show the landlord failed on any of them has a defense against eviction and a basis for rent reduction or damages. Deferring maintenance on these systems puts the owner at real risk.

Entering an Occupied Unit

Entry is permitted only for specific reasons: emergencies, necessary repairs, showing the unit to prospective tenants or buyers, or certain health and safety inspections.¹⁰ Outside of emergencies, the landlord must give written notice at least 24 hours in advance, and may only enter during normal business hours unless the tenant consents otherwise. The notice must state the date, approximate time, and purpose. It can be hand-delivered, left with a person of suitable age at the unit, or placed on or near the main entry door where the tenant would reasonably find it. Abusing the right of entry to harass a tenant violates the statute and can support a damages claim.

Required Pre-Lease Disclosures

Several disclosures must be delivered before a tenant signs. Missing one can void certain lease provisions or expose the owner to liability.

Lead-based paint: for any property built before 1978, federal law requires disclosure of known lead-based paint hazards and delivery of the EPA pamphlet.¹¹
Sex offender database: every rental agreement must include the specific Megan’s Law notice directing tenants to the California Department of Justice website.¹²
Bed bugs: before a new tenancy begins, the landlord must give written information on identification, prevention, and prompt reporting. If bed bugs are found, the unit cannot be shown, rented, or leased until the infestation is eliminated.¹²
Shared utility meters: if the tenant’s gas or electric meter also serves common areas or other units, that arrangement must be disclosed before the lease is signed.

Build a disclosure checklist into the leasing workflow. A single missed disclosure on a single unit tends to surface during litigation.

Fair Housing

California’s fair housing protections are broader than the federal baseline. The federal Fair Housing Act prohibits discrimination based on race, color, national origin, religion, sex, familial status, and disability.¹³ California’s Fair Employment and Housing Act adds sexual orientation, gender identity, gender expression, marital status, ancestry, source of income, veteran or military status, and genetic information.¹⁴

The source-of-income protection matters daily: a manager cannot reject a tenant simply because they plan to pay rent with a Housing Choice Voucher (Section 8) or other government assistance. Advertising “no Section 8” violates California law.

Assistance Animals

Landlords must grant reasonable accommodations for tenants with disabilities, including exceptions to no-pet policies for service animals and emotional support animals. No pet deposits or fees can be charged for assistance animals.¹⁵ When the disability and need for the animal are not obvious, the landlord may ask for documentation from a healthcare professional confirming both. Certificates purchased from online registries that sell them to anyone who pays are generally not considered reliable documentation.

Tenant Screening and Credit Reports

Running a background or credit check triggers the federal Fair Credit Reporting Act. Before pulling a consumer report, get the applicant’s written permission and certify to the reporting agency that the report will be used only for housing.¹⁶

If you deny the application, require a co-signer, charge higher rent, or take any other adverse action based on information in the report, you must send an adverse action notice. It must include the reporting agency’s name, address, and phone number, a statement that the agency did not make the decision, and an explanation of the applicant’s right to dispute inaccurate information and request a free copy of their report within 60 days. When a credit score factored in, the notice must also include the score, how the model works, and the key factors that hurt it.¹⁶

Once the screening decision is made, reports must be securely destroyed. Shred paper copies and make sure electronic files cannot be read or reconstructed. Tossing a credit report in the office trash is a violation.

Eviction Notices

Eviction starts with a written notice, and the wrong type or format can sink the case in court.

3-day notice to pay rent or quit: for unpaid rent. The notice must state the exact amount owed, where and how to pay, and that the tenant has three days to pay or move out. Weekends and court holidays do not count.¹⁷
30-day notice to quit: ends a month-to-month tenancy when the tenant has rented for less than one year.
60-day notice to quit: required when the tenant has rented for one year or more.

For AB 1482 properties, a 30-day or 60-day notice must also state the just cause reason. If it’s a no-fault ground, the notice must inform the tenant of their right to relocation assistance or a last-month rent waiver.¹⁷ Only after the notice period expires without compliance can the landlord file an unlawful detainer lawsuit. Self-help evictions, like changing locks or shutting off utilities, are illegal and can leave the landlord owing the tenant significant damages.

Resident Manager Rule

California requires a resident manager to live on-site at any apartment building with 16 or more units, unless the owner lives on the premises.¹⁸ The rule also applies to hotels with 12 or more guest rooms. The resident manager must be a responsible person in charge, meaning someone who can respond to emergencies, handle routine maintenance requests, and enforce building rules.

Taking over a building near the 16-unit line catches some management companies off guard. If the property qualifies, someone has to live on-site, which usually means providing a unit at reduced or no rent. That arrangement carries its own employment law consequences, since resident managers are generally classified as employees entitled to minimum wage protections for on-call hours.

Lead Paint Renovations

Beyond the disclosure at lease signing, renovations on pre-1978 buildings fall under the EPA’s Renovation, Repair, and Painting rule. Any firm performing renovations for compensation in pre-1978 housing must be EPA-certified, and a certified renovator must be assigned to every job.¹¹

The certified renovator must be physically present when warning signs are posted, containment is set up, and post-renovation cleaning takes place. Work practices include covering floors with plastic sheeting, sealing off the work area to prevent dust spread, and using HEPA-equipped vacuums for cleanup. Open-flame torching of painted surfaces is prohibited, and heat guns can only be used below 1,100 degrees Fahrenheit. Before work begins, the firm must provide occupants with the EPA’s “Renovate Right” pamphlet and get written acknowledgment. Firm certification lasts five years and must be renewed. A manager who hires an uncertified contractor for renovation work in an older building shares liability for the violation.

The Property Management Agreement

A broker acting as a property manager must have a written agreement with every owner. The contract establishes the agency relationship and defines the manager’s authority.¹⁹ A handshake invites disputes over who authorized what, and the Department of Real Estate treats the absence of a written agreement as a compliance failure.

At minimum, the agreement should cover:

Scope of authority: whether the manager can sign leases, approve maintenance spending, initiate evictions, and handle owner funds.
Compensation: the management fee structure, typically a percentage of collected rent, plus any separate fees for leasing, renewals, or oversight of major repairs.
Trust account handling: how tenant funds will be held and disbursed.
Termination: how either party can end the relationship, with required notice periods.
Insurance: whether the manager carries errors and omissions coverage against claims like wrongful eviction, discrimination complaints, or failure to maintain the property.

Owners should read the scope-of-authority section carefully. A manager with broad authority to approve repairs with no spending cap can generate expenses the owner never anticipated. On the other end, an agreement requiring owner approval for every minor repair slows response times and can lead to habitability complaints.

Late Fees

California does not set a specific dollar cap on late fees, but Civil Code Section 1671 requires that any late fee in a lease be a reasonable estimate of the actual cost the landlord incurs from a late payment. Courts have found fees in the 5% to 10% range of monthly rent defensible when they genuinely reflect administrative costs, but a fee that functions as a penalty rather than a cost estimate is unenforceable. Document the basis for whatever late fee goes into the lease, because a tenant who challenges it in court shifts the burden to the landlord to prove the fee was reasonable.

1
California Legislative Information. Business and Professions Code – BPC Article 1 Scope of Regulation
2
California Legislative Information. California Code BPC 10131.01
3
California Legislative Information. California Civil Code 1947.12
4
California Legislative Information. California Civil Code 1946.2
5
California Department of Justice. Know Your Rights Security Deposits
6
California Apartment Association. New Law Limiting Security Deposits in Effect as of July 1
7
New York Codes, Rules and Regulations. California Code of Regulations Title 10 2832 Trust Fund Handling
8
California Department of Justice. Know Your Rights Habitability
9
Justia. CACI No. 4320 Affirmative Defense Implied Warranty of Habitability
10
California Legislative Information. California Civil Code 1954
11
eCFR. 40 CFR Part 745 Subpart E Residential Property Renovation
12
California Department of Real Estate. Landlords Disclosures
13
U.S. Department of Housing and Urban Development (HUD). Housing Discrimination Under the Fair Housing Act
14
California Legislative Information. California Government Code 12955
15
U.S. Department of Housing and Urban Development (HUD). Fact Sheet on HUDs Assistance Animals Notice
16
Federal Trade Commission. Using Consumer Reports What Landlords Need to Know
17
California Courts. Types of Eviction Notices Tenants
18
Cornell Law Institute. California Code of Regulations Title 25 Section 42 Caretaker
19
California Department of Real Estate. Reference Book Chapter 22 Property Management