Do California Landlords Have to Refund Security Deposits Electronically Now?

Published August 10, 2026

AB 414 amends Civil Code section 1950.5 so that if a landlord took rent or the deposit electronically, the deposit refund has to go back the same way, to an account the tenant designates in writing. Checks are still allowed by written agreement, and a check must name every adult tenant on the lease.

The short answer

Yes, with a trigger. Under AB 414, amending Civil Code section 1950.5, if a landlord received rent or the security deposit electronically, the deposit refund must go back electronically too, to an account the tenant designates in writing, unless the tenant agrees in writing to something else. Checks made out to all adult tenants on the lease remain the fallback.

Last verified: August 10, 2026

What actually changed

Civil Code section 1950.5 has governed California security deposits for decades: the deadline to return them, what an itemized deduction statement must contain, and how long a landlord has after a tenant moves out. AB 414 does not touch most of that. It amends one specific mechanic: the method of returning whatever portion of the deposit is not deducted.

Before this bill, the statute assumed a check. Most landlords still mailed one. AB 414 catches the statute up to the fact that a lot of rent now moves by ACH, a tenant portal, or a payment app.

The operative language sits in subdivision (h)(1)(A)(ii) of section 1950.5. It ties the refund method to how the landlord actually received money from the tenant. If the landlord received the security deposit or the rental payments electronically, the landlord must return the remainder of the security electronically, to a bank account or other financial institution the tenant designates in writing, or by another electronic or virtual method if the tenant agrees to it in writing.

That is a conditional rule, not a blanket one. It turns on the landlord's own receiving history, not on a general mandate that all California deposits now move by wire.

The notice duty landlords carry

The statute does not let the electronic requirement sit passively. Under subdivision (h)(1)(A)(ii)(II), a landlord who received payments electronically has to notify the tenant in writing of the tenant's right to receive the deposit electronically, to a bank account or institution the tenant designates. This notice sits alongside the landlord's other move-out and deposit disclosure duties.

Practically, this means the conversation about how the deposit comes back should happen before or at move-out, not be discovered by the tenant three weeks later when a check shows up they were not expecting or, worse, did not want.

Checks are not gone

Electronic is not mandatory in every case, and it is not the only lawful method even when it applies. Two off ramps exist.

First, the parties can agree in writing to a different method entirely. The statute lets the landlord and tenant designate another method of return by written agreement, which can be a mailed check, in which case the check rule below governs.

Second, if the landlord never received rent or the deposit electronically in the first place, the electronic-return trigger in (h)(1)(A)(ii) does not apply, and a paper check remains standard practice.

The multiple-tenant check rule

Separate from the electronic question, AB 414 also addresses a recurring headache for landlords with roommates or co-tenants on one lease: who does the check go to.

Under subdivision (h)(1)(C)(i), when multiple adult tenants reside in the unit, the landlord must return the remainder of the security by a check made payable to all adult tenants named on the rental or lease agreement at the time the tenancy terminates, and deliver the itemized statement to any one tenant the landlord selects, unless all the tenants sign a written mutual agreement specifying an alternative.

That written mutual agreement can cover how any remaining portion of the security is returned and whether the landlord will furnish the itemized statement by email or first class mail. So a group of roommates can, in writing, tell the landlord to split the refund, send it to one person's account, or handle delivery differently than the default. Absent that agreement, the check names everyone.

What this looks like in practice

| Scenario | Refund method under section 1950.5 |

|---|---|

| Landlord received rent electronically, tenant designates an account in writing | Electronic transfer to that account |

| Landlord received rent electronically, tenant and landlord agree in writing to another method | Whatever method they agreed to, which can be a check |

| Landlord never received electronic payments from this tenant | Standard check, no electronic-return trigger |

| Multiple adult tenants on the lease, no written mutual agreement on refund handling | Check made payable to all adult tenants named on the lease |

| Multiple adult tenants, signed written mutual agreement on an alternative | Whatever the signed agreement specifies |

Confirm the current statute text directly at the leginfo link in the sources below before applying this table to a specific move-out. Statutory language can be amended again in a later session.

Why this matters for a small landlord

Most of the operational risk here is not legal exposure over a missed refund, it is friction and disputes. A landlord who never asks a departing tenant how they want the deposit back, then mails a check to an address the tenant already left, has created a dispute that did not need to exist. Building a short written notice into the move-out packet, asking the tenant to designate an account or confirm a mailing address in writing, closes that gap and creates the paper trail the statute now expects.

For a unit with two or three tenants on one lease, get the written mutual agreement on refund handling signed at move-in or move-out, not after the deposit dispute has already started. It is much easier to get four signatures on a simple form before anyone is upset about money.

FAQ

Does AB 414 force every California landlord to refund deposits electronically?

No. The electronic requirement only applies when the landlord received the security deposit or rental payments from that tenant electronically. If the landlord only ever took paper rent checks, the standard check-based refund process still applies.

Can a tenant refuse an electronic refund and ask for a check instead?

Yes. The parties can agree in writing to a different method of return, which includes a check, even where the electronic trigger would otherwise apply.

What if there are three roommates on one lease and only one wants the refund?

Absent a written mutual agreement signed by all the adult tenants specifying otherwise, the check must be made payable to all adult tenants on the lease. A signed agreement among the tenants can redirect that.

Does this change the 21 day deadline to return the deposit?

AB 414's changes are about the method of return and the multiple-tenant check rule. The 21 calendar day itemized statement deadline in subdivision (h)(1) is part of the existing statute; confirm its current wording at the live code link in the sources below before treating it as unchanged.

When did AB 414 take effect?

It was signed October 6, 2025 as Chapter 340. Standard California practice for a chaptered bill without an urgency clause is a January 1 effective date the year after signing, which points to January 1, 2026, but confirm the operative date against the current statute text rather than this article alone.

This article is general information about a California statute, not legal advice. Confirm the current text of Civil Code section 1950.5 and how it applies to a specific tenancy with a licensed California real estate attorney or property manager before acting on it.

Topics: compliance, security deposits, California landlord law, AB 414, South Bay

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