Trusted by property owners and tenants across Southern California. We deliver exceptional property management with a personal touch.
Focused Portfolio
Owner-Operated
Managing the South Bay
Published July 15, 2026
AB 414 says if rent or the deposit was paid electronically, the refund must be too, unless you and the tenant agree otherwise in writing.
Yes, starting January 1, 2026. Under Assembly Bill 414, if a California landlord received rent or the security deposit electronically, the remaining deposit must be refunded electronically too, to an account the tenant designates in writing, unless both parties agree in writing to a different method. The existing 21 day itemized statement deadline under Civil Code section 1950.5 does not change.
AB 414 amends Civil Code section 1950.5, the statute that governs every residential security deposit in California. For years the law assumed a paper world: a landlord mailed a check and an itemized statement within 21 calendar days of move out. That worked fine when rent came in by check. It works less well now that most South Bay tenants pay rent through Zelle, Venmo, a bank portal, or a property management app, and then get handed a paper check for their deposit weeks later, sometimes to an address they moved out of.
AB 414 closes that gap. If we received the tenant's rent or security deposit electronically, we are now required to return the remaining deposit the same way, to a bank account or financial institution the tenant designates in writing. The tenant and landlord can still agree, in writing, to use a different method instead, a paper check by first class mail, personal delivery, or something like Venmo, as long as both sides sign off. That written agreement can be made at lease signing, in a later addendum, or after move out. It does not have to wait until the tenant is already gone.
Most of our South Bay rentals have more than one adult tenant on the lease, roommates splitting a unit near the airport, or a family where both spouses signed. AB 414 sets a default rule for that situation too. Unless every adult tenant on the lease agrees in writing to something else, the refund goes out as a single check made payable to all adult tenants, not split between individual accounts and not sent to whichever roommate calls first. If the group wants the deposit divided, sent electronically to several accounts, or paid to one designated person, they need to put that agreement in writing themselves. Otherwise we default to the one check, payable to everyone, rule.
It is worth being precise about the limits of this bill, because a lot of the marketing copy out there overstates it. AB 414 does not touch the 21 calendar day deadline to send the itemized statement of deductions and any remaining deposit after a tenant vacates. It also does not change what a landlord can lawfully deduct, damage beyond normal wear and tear, unpaid rent, and cleaning costs tied to actual damage, which is still governed by the same section 1950.5.
And it does not touch the deposit cap. Under the amendments made by AB 12 (effective July 1, 2024), most California landlords are limited to collecting the equivalent of one month's rent as a security deposit, with a narrow small landlord exception for owners of no more than two rental properties totaling four or fewer units. AB 414 is strictly about how the refund gets paid, not how much you can collect or how fast you have to account for it.
If you are still writing paper checks for security deposit refunds while collecting rent through an online portal, this is the year to fix your process. Confirm you can capture a tenant's bank details in writing at lease signing or move out, and build a written opt out into your move out paperwork for tenants who would rather get a check. If you manage a unit with roommates, have a single written agreement on file for how a shared deposit gets split, before move out day, not during a dispute.
If you would rather not track every deposit law change yourself, that is what we do. We build the written agreements into our move in and move out paperwork so nothing falls through on refund day.
This is general information, not legal or tax advice. Confirm with a licensed professional before you act.
Last verified: July 2026.
Topics: compliance, security deposits, AB 414, Civil Code 1950.5, South Bay landlords
Back to the Schofield Properties blog
Schofield Properties is a family run property management company at 323 Richmond St, El Segundo, CA 90245. We have managed the South Bay since 1972 and personally oversee about 186 doors today. Book a call to talk about your property.
_1771595201102_optimized-600-hSjj9YMN.webp)
_1771595201094_optimized-DUHa1RXZ.webp)