What is AB-12 and How Will it Affect Landlords?

Today's blog post is going to go over the most recent change that is being set in place this July; a new security deposit law titled AB-12. 

Understanding AB 12

AB 12 introduces a crucial adjustment to how security deposits are handled in our state. Specifically, the law limits landlords to collecting only one month's rent as a security deposit. This change aims to make renting more accessible and affordable for tenants but presents new challenges for property owners accustomed to relying on larger deposits as a safety net against potential damages. 

The Impact of Reduced Security Deposits

Traditionally, security deposits have provided landlords with a measure of protection against the costs incurred from damages that exceed normal wear and tear, or to cover unpaid rent. With AB 12, the cushion that larger deposits provided will disappear, leaving landlords to find new ways to mitigate these risks.

Strategic Adjustments for Property Owners

Landlords must now rethink their strategies to ensure that their investments remain protected without the financial buffer larger deposits once offered. Here are several strategies to consider:

1. Increasing Minimum Credit Score Requirements

Adjusting the minimum credit score required for tenant applications is a straightforward response. Where a 600 credit score might have sufficed in the past, raising this requirement to 650 or even higher can help ensure that you're renting to individuals with a stronger financial history and lower risk of default or damage.

2. Exploring Risk Mitigation Services

Several companies offer services specifically designed to help landlords mitigate risks. For example, companies like The Guarantors and LeaseLock provide products that replace security deposits with insurance policies, covering multiple scenarios from unpaid rent to damage. These services can help landlords feel more secure, knowing that they’re protected beyond the limited security deposit allowed under AB 12. These services are not an end all be all fix however. While they are amazing in terms of a short term solution, you can not fully get rid of security deposits, and a tenant has to choose which one they want to go with. This means that you will not be able to fully get rid of the security deposit system.

3. Enhancing Tenant Screening Processes

More thorough tenant screening can offset potential risks. This enhanced screening goes beyond credit scores, encompassing background checks, employment verification, and even checking in with previous landlords. A comprehensive screening process can alert landlords to potential red flags before a lease is signed.

Long-Term Solutions and Industry Collaboration

Looking to the future, property owners should consider long-term strategies and industry collaboration. Engaging in property management forums, attending workshops hosted by real estate associations, and even participating in online webinars are great ways to stay informed and connected with industry advancements.

Industry Trends and Predictions

Experts predict that as laws like AB 12 become more common, we'll see an increase in the popularity of alternative risk management tools. For instance,  recent studies suggest that as traditional security deposits become less reliable for risk mitigation, more landlords are turning to technology-based screening tools and insurance solutions to protect their assets.

The Role of Professional Property Management

For many property owners, adapting to these changes can be overwhelming. Working with a professional property management company, like PMI Riverside, offers a buffer and a wealth of knowledge and resources to navigate these new regulations effectively. Such firms stay on the leading edge of legal changes and innovative management practices, ensuring that property investments are both compliant and profitable.


The introduction of AB 12 represents a shift towards more tenant-friendly regulations, but it also serves as a catalyst for innovation and adaptation in the property management industry. By embracing new strategies for risk mitigation, improving tenant screening processes, and leveraging professional resources, landlords can navigate these changes successfully.

This adaptation period is an opportunity for growth and learning. As we move forward, staying informed and proactive will be key to thriving under the new regulations. Property owners who view these changes as an opportunity to refine their operations will likely emerge stronger and more resilient in the face of any future challenges.

Navigating the evolving landscape of property management requires both vigilance and creativity. As always, we at PMI Riverside are here to support and guide our clients through these changes, ensuring that their property investments continue to prosper under the new legal framework.