California Security Deposit Transfer when Landlord Sells Property

The California Civil Code, Chapter 2, Section 1950.5 governs the handling of a tenant’s security in the following manner when the ownership of the rental property changes.

Termination of the Landlord’s Interest

Upon termination of the landlord’s interest in the premises, whether by sale, assignment, death, appointment of receiver, or otherwise, the landlord or the landlord’s agent shall, within a reasonable time, do one of the following acts, either of which shall relieve the landlord of further liability with respect to the security held:

Transfer the portion of the security remaining after any lawful deductions made to the landlord’s successor in interest. The landlord shall thereafter notify the tenant by personal delivery or by first-class mail, postage prepaid, of the transfer, of any claims made against the security, of the amount of the security deposited, and of the names of the successors in interest, their addresses, and their telephone numbers. If the notice to the tenant is made by personal delivery, the tenant shall acknowledge receipt of the notice and sign his or her name on the landlord’s copy of the notice.
Return the portion of the security remaining after any lawful deductions made to the tenant, together with an accounting.

Voluntary Transfer of Landlord’s Interest

Prior to the voluntary transfer of a landlord’s interest in the premises, the landlord shall deliver to the landlord’s successor in interest a written statement indicating the following:

The security remaining after any lawful deductions are made.
An itemization of any lawful deductions from any security received.
His or her election under paragraph (1) or (2) of the subsection Termination of the Landlord’s Interest.

Note: This subsection does not affect the validity of title to the real property transferred in violation of this subsection.

Landlord Noncompliance

In the event of noncompliance with the subsection Termination of the Landlord’s Interest, the landlord’s successors in interest shall be jointly and severally liable with the landlord for repayment of the security, or that portion thereof to which the tenant is entitled. A successor in interest of a landlord may not require the tenant to post any security to replace that amount not transferred to the tenant or successors in interest, unless and until the successor in interest first makes restitution of the initial security or provides the tenant with an accounting.

Note: This section does not preclude a successor in interest from recovering from the tenant compensatory damages that are in excess of the security received from the landlord previously paid by the tenant to the landlord.

Amended by Stats. 2013, Ch. 76, Sec. 12. (AB 383) Effective January 1, 2014.

Also see California Security Deposit Laws for Collecting and Returning.

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