Steve Welty

Issue# 71

October 2025

Happy Saturday, Housing Heroes!

California housing providers are getting a little more flexibility and a lot more clarity when it comes to returning tenants’ security deposits.

Governor Gavin Newsom just signed Assembly Bill 414 (AB 414), introduced by Assemblymember Gail Pellerin (D–Santa Cruz). The new law takes effect January 1, 2026, and it modernizes how deposits are returned and how itemized statements are delivered.

Think of it as California’s way of finally catching rental laws up with the digital world we already live in.

What’s Changing

Electronic Refunds, Simplified

Under the old rules, housing providers and tenants could only agree to send a deposit refund electronically after a notice to end the tenancy was given.

Starting in 2026, that restriction disappears.

You can now agree at any time - even when the lease is first signed to send or receive deposit refunds electronically.

And if you’ve been collecting rent or security deposits online (through Zelle, Venmo, ACH, or another platform), you’ll need to return the deposit that same way - unless you and the tenant agree in writing to use another method.

That means:

If rent came in electronically, the refund goes out electronically.
Tenants need to provide the right account info for the return.
Both sides can always agree on something else (like a check) as long as it’s in writing.

This change makes move-outs faster, easier, and more consistent for everyone.

Itemized Statements by Email

Good news for anyone tired of printing and mailing letters:

AB 414 now allows housing providers and tenants to agree at any time to receive the itemized statement of deductions by email.
Before, this could only happen after a tenancy ended.
Now, you can decide upfront, right in the lease.

When There’s More Than One Tenant

If multiple adults are listed on the lease, AB 414 finally makes it clear how to handle refunds.

By default:

The housing provider issues one check payable to all adult tenants, and
The check can be mailed to any one of those tenants.

But if everyone prefers something different, that’s fine too just put it in writing. You can decide who gets the refund, how it’s divided, and whether each person gets their itemized statement by email or mail.

Quick Recap

Key Updates Under AB 414

Topic

What’s New Under AB 414

Electronic refunds

Housing providers and tenants can agree anytime to use electronic transfers.

Email statements

Itemized deduction statements can be sent by email at any point, not just after move-out.

Multiple tenants

Default is one check payable to all adults, unless there’s a written agreement to do it differently.

Matching payment method

If rent or deposits were paid electronically, refunds must also be electronic (unless agreed otherwise).

Effective date

January 1, 2026

What Housing Providers Should Do Before 2026

Update lease templates.
Add clauses that:
- Confirm electronic refunds (or specify another method)
- Authorize email delivery of itemized statements
- Address multi-tenant allocation (who gets paid/how it’s split; where statements go)
Improve your systems.
Make sure your accounting or payment platform can issue electronic refunds and store confirmations.
Collect contact & payment info.
Verify tenant emails and refund account details at move-in and renewal.
Standardize move-out workflows.
Calendar the 21-day deadline, attach the itemized statement, and keep proof of delivery (email or mail) and refund completion.
Document agreements.
Save written agreements that deviate from the default (paper check, specific payee, allocation percentages, email vs mail).

The Bottom Line

AB 414 isn’t a major overhaul but it’s a smart update that makes things easier for both housing providers and tenants.

By embracing electronic payments and email communication, California is cutting down on paperwork, confusion, and delays. If you’re already collecting rent digitally, this law just makes your process official.

So take a little time this year to update your leases and systems and when 2026 arrives, your move-outs will be smooth, quick, and fully compliant.

🎥 5 Lessons Learned From 1500 Rental Properties Managed

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