Still Returning Deposits the Old Way? AB 414 Changes Everything

California landlords have new security deposit rules to prepare for starting in January 2026. Under AB 414, landlords may need to return security deposit balances electronically if the tenant paid electronically, unless the tenant agrees in writing to another method.

The law also affects how notices and itemized statements may be delivered, creating new compliance risks for landlords and property managers. In this blog, we’ll explain what AB 414 changes, what stays the same, and why updating your move-out procedures now can help prevent costly disputes later.

Need help staying compliant with AB 414? Contact SNS Law Group today to review your security deposit procedures, update your forms, and protect your rental property from avoidable disputes.

California landlords, if you’re still returning security deposits the same way you always have, AB 414 could put you out of compliance starting in January 2026.

I’m Edrin Shamtob, a partner at SNS Law Group and a California real estate attorney with over 11 years of experience representing landlords.

New Security Deposit Rules for Landlords

I want to walk you through new laws that will impact your rental properties. Assembly Bill 414 Updated California Security Deposit Rules. This law doesn’t change how much you can deduct. It changes the manner in which you have to return the deposit and the paperwork required.

How to Return Security Deposits

Under AB 414, if a tenant paid their deposit electronically, the landlord is now required to return the balance of the security deposit electronically by default. This could be done by ACH, direct deposit, or another electronic transfer.

You can still send a paper check, but only if the tenant agrees in writing. This law puts a big emphasis on written consent.

Notify Tenants of Rights

Landlords must notify tenants of the right to receive the deposit electronically, and if the tenant wants a different method, that agreement must be in writing.

No written consent means you don’t get to choose the method.

Additional Security Deposit Considerations

AB 414 allows landlords to send itemized statements electronically, but again only with written tenant consent. If you don’t have consent, you will still have to follow the traditional delivery rules.

The biggest mistake landlords will make under AB-414 is assuming old habits still work. This law creates procedural compliance traps and mistakes can lead to disputes or claims that a deposit was mishandled.

Contact SNS Law Group About AB 414 Security Deposit Law

If you’re a landlord or a property manager, now is the time to update your move-out procedures and forms. And if you’re unsure, contact our landlord-tenant attorneys at SNS Law Group before a tenancy ends, not after a problem starts.