2026 Legal Compliance Update

AB 246, Social Security Tenant Protection Act of 2025,

Codified at California Civil Code § 1946.3. 

During the recent federal government shutdown which lasted a record 43 days, the legislature enacted protections for Social Security recipients facing an unlawful detainer action for nonpayment of rent. 

Effective January 1, 2026, this law creates an affirmative defense to eviction for nonpayment of rent for tenants who experience a loss of income resulting from an interruption in the payment of Social Security benefits. The Social Security hardship cannot be due to the tenant’s failure but must be due to action or inaction of the federal government. The law does not relieve tenants of their obligation to pay rent. If a tenant can prove their loss of Social Security benefits, the court can pause an unlawful detainer action until (a) 14 days after Social Security benefits are restored or (b) up to six months, whichever occurs first. After social security benefits are restored, a tenant can have the unlawful detainer action dismissed and tenancy restored if they pay all past due rent or enter a payment plan within 14 days of restoration of their benefits. This eviction protection expires on January 20, 2029.

The law does not require landlords to notify tenants about this provision and it does not prevent landlords from issuing notices of termination or instituting an unlawful detainer action. 

AB 325, Common Pricing Algorithm Restrictions.

Codified at California Business and Professions Code § 16729.  

This law amends California’s antitrust law, the Cartwright Act, to apply to the use of pricing algorithms, including those used to analyze or recommend rent levels.  

The law broadly defines a common pricing algorithm as any technology used by two or more persons that uses competitor data to recommend, align, stabilize, set, or otherwise influence a price or commercial term.  It creates liability for (1) using or distributing a common pricing algorithm as part of a contract, combination or conspiracy restraining trade, or (2) coercing another firm to adopt an algorithm’s recommended price or term for similar products or services in California.  It also provides that complaints filed under the Cartwright Act are judged under a lower plausibility standard and need not allege facts to exclude the possibility of independent action, which means it will be easier to initiate actions under the Cartwright Act.

In addition, California passed SB763 which increased penalties under the Cartwright Act from a maximum fine of $250,000 to $1 million, or twice the gain or loss caused by the violation, whichever is greater.  The law also allows for civil penalties.  

Along with these changes, the Attorney General’s office has promised to reinvigorate criminal prosecutions under the Cartwright Act.  In 2024, California and 8 other states joined the U.S. Department of Justice in a lawsuit against RealPage, a revenue management software company used by landlords to price multifamily rental housing units.  In January 2025, the complaint was amended to add the nation’s largest property management companies as defendants.  These companies were accused of maintaining an unlawful pricing alignment scheme sharing competitively sensitive data with one another to artificially raise rents and increase rent revenue across the board in violation of the Sherman Act and California’s Unfair Competition Law.  In November, the California Attorney General announced that they had reached a $7 million settlement with one of the companies, GreyStar.  

It is important to note that the law does not ban pricing algorithms.  However, it has created some uncertainty about what is allowed.  First, it clearly would not apply to a company’s own proprietary pricing software, if it uses no competitor data.  If you use a common pricing algorithm though, you will want to think about how you can show that your pricing or commercial terms were the result of independent action.  Second, it creates liability for parties that coerce others to adopt algorithm-recommended prices, even without a formal agreement. The law does not define “coercion,” but legislative materials suggest it was meant to cover conduct that penalizes users for declining to follow a recommended price.  Thus, it does not seem that it is intended to target unwitting users or licensees of a common pricing algorithm.  Still, we recommend maintaining records that establish that your pricing and other commercial terms are the product of independent decision-making.

AB 414, Security Deposits.

Codified at California Civil Code § 1950.5.

The California legislature continued to tweak the security deposit process.  In 2024, the law was amended to restrict security deposits to one month’s rent whether the premises are furnished or not with limited exceptions.  In 2025, the legislature mandated that a landlord must photograph a unit before the start of a tenancy, as well as after regaining possession, to include with any itemized security deposit disposition statement.  

Effective January 1, 2026, there is some new flexibility regarding security deposits. First, landlords and tenants can agree at any time on how deposits will be returned, including electronically. Previously, they could only agree to an electronic refund after a notice of termination of tenancy, but now the return method can be decided on at any time, including when the lease is executed.  Similarly, while the default method for sending an itemized statement of deductions is by personal delivery or mail, the parties can agree to have the statement emailed instead.  

Importantly, if the tenant paid the security deposit, or any rental payment, electronically, the landlord must return the security deposit electronically unless the parties agree otherwise in writing.  Additionally, the law requires giving tenants a notice of their right to electronic return of the security deposit within a reasonable time of notice of termination or before the end of the lease term.  

A landlord’s successor in interest may not know how the security deposit was paid.  For this reason, the law provides that a successor in interest has to return the deposit electronically (and provide notice of the right of electronic return) only if the successor received rental payments electronically.

Finally, where multiple tenants share a lease, a security deposit may be refunded via a single check made payable to all adult tenants and mailed to any one of the tenants.  The parties may still agree to a different arrangement, but this default rule helps provide clarity when roommates disagree or do not respond.

AB 628- Habitability, Stove and Refrigerator Added.

Codified at California Civil Code § 1941.1.

Existing law requires that any building with a dwelling unit maintain certain habitability standards, including the maintenance of running water, heat, electricity, and plumbing. Under this law, rental units are required to provide a stove and refrigerator and maintain them in good working order.  This law applies to any lease entered into, amended, or extended on or after January 1, 2026.  Good working order means the stove can safely generate heat for cooking purposes and the refrigerator can safely store food. The law also requires a landlord to repair or replace a stove or refrigerator that is subject to a manufacturer recall within 30 days of receiving notice of the recall.

The law provides that a tenant and landlord may also mutually agree to let the tenant provide their own refrigerator (but not a stove).  A landlord does not have to allow a tenant to provide their own refrigerator.  If agreed to by both parties, the law requires the lease to include specific language that informs the tenant of their responsibility of keeping their refrigerator in working order. If a tenant later informs a landlord that they no longer wish to keep their own refrigerator, a landlord has 30 days to provide a refrigerator.  

AB747, Changes to Service of Unlawful Detainer Lawsuit

Codified at California Civil Code § 473.2.

Effective January 1, 2027 (not 2026), this law requires “reasonable diligence” in personal service attempts of the Summons and Complaint in Unlawful Detainer actions, before resorting to substituted service. “Reasonable diligence” is defined as at least three good faith attempts on three different days at three different times. Note: This was already a requirement in case law, but it is now officially codified in state law.  

Proof of service for Unlawful Detainer Summons and Complaint must include a photograph of the site of service and GPS stamp of date, time and location of service.  If a GPS stamp is not available, the proof of service must provide a detailed statement about how service was effectuated.  The Unlawful Detainer Complaint must also plead specific details regarding the method of service of termination notice, including the date, time and location of effected service.

AB1414, Landlord-Tenant: Internet Service Provider Subscriptions. 

Codified at California Civil Code 1942.8.

Landlords are required to allow tenants to opt out of paying for any subscription from a third-party internet service provider for wired internet, cellular, or satellite service. The law applies to any residential tenancy commenced, renewed, or continuing on a month-to-month or other periodic basis, on or after January 1, 2026.  If a landlord violates this provision, a tenant may deduct the cost of the subscription from their rent.  Landlords are also prohibited from retaliating against a tenant for exercising their right to opt out.  

The law leaves the method for administering the opt out to the discretion of landlords.  There is not a requirement to notify tenants of their right to opt out.  The law simply says landlords “shall allow the tenant to opt out.”  We recommend including an opt out provision in your lease and/or internet service addendum.  This allows you to guide tenants on how they can notify you of their desire to opt out as well as to set clear terms for how you will administer the internet subscription.  

The opt out also raises several potential issues in rent-controlled properties.  If a tenants opt out and landlords lose revenue because of it, they cannot freely raise rent to offset the loss because of set caps on rent increase percentages. Even if there are very real costs associated with administering the internet service and fluctuating tenant participation, passing this cost as an operating expense may be difficult since pass-throughs are tightly regulated.  Also, some jurisdictions view internet as a “housing service” akin to parking or laundry.  Removing or reducing internet when a tenant opts out may be deemed a “reduction” in a housing service which could allow tenants to seek a corresponding rent decrease.

AB1529, Simplification of AB1482 Disclosure Requirement.

This law removes the requirement that the AB 1482, Tenant Protection Act of 2019 disclosure be provided as an addendum to the lease.  Now, this disclosure can just be provided in the lease or rental agreement itself.

SB 610 – Post-disaster Obligations for Landlords.

Codified at California Civil Code §§ 798.64, 1941.8, 1941.9; California Financial Code § 338; California Government Code § 65863.7.

Following the widespread destruction caused by the Eaton fire, the California legislature passed a law to clarify the responsibilities of landlords who choose to re-rent a property following a disaster. This applies to any natural or manmade disaster as declared by the Governor of California or US President, and not simply a local emergency declaration.

This law emphasizes that landlords are not required to rebuild following a disaster.  California Civil Code § 1933(4) already provides that if a property is completely destroyed, the tenancy is automatically terminated.  However, if the property is damaged or only partially destroyed,  the tenancy remains in effect until it is lawfully terminated.  Tenants are not obligated to pay rent for any time they are unable to occupy the unit due to an evacuation order. If they already paid rent during an evacuation period, the rent for that time period should be returned within 10 days after the evacuation order is lifted. If a tenancy is terminated due to damage from the disaster, the landlord should return any advance rental payments made within 21 days of termination.  

If a landlord decides to rebuild, it is the duty of the landlord, not the tenant, to remove debris and mitigate hazards caused by the disaster, including the presence of mold, smoke, smoke residue, smoke odor, ash, asbestos, or water damage.  The landlord is required to clean the property within a “reasonable time” and according to any protocols issues by government officials, including contracting with licensed remediation companies where required. 

The law presumes the property is untenantable while “any debris” remains at the property, unless a determination has been made by a local public health official confirming the absence of toxic substances.  The law is not clear on what level of debris triggers this presumption so it is important to take protocol-approved steps and keep good records of all clean-up efforts.

If a tenant provides an email or mailing address, the landlord should notify the tenant at that address when the repairs are complete.  The landlord should also advise the tenant of the right to view and receive copies of any “environmental studies, testing, or reports conducted.”  The tenant then has a right to return to the rental at the same rental rate in effect before the disaster, unless the tenancy was lawfully terminated.

The law also calls for mortgage forbearance, foreclosure prevention and loss mitigation programs for borrowers who experience a material decrease in income or material increase in expenses due to a wildfire emergency.

AB1248, Ban on Ratio Utility Billing

AB1248 (Haney, 2025) was poised to ban Ratio Utility Billing Systems (RUBS) beginning on January 1, 2026.  Thanks to the lobbying of various constituents, the bill was amended to focus on the advertising and disclosure of fees and then was tabled in June 2025 for further refinement.  The bill reflects an ongoing trend to require transparent fees, to tie billing to actual use, and to promote energy conservation.  Although the bill was tabled, it may come back in some form in the future.  

Eshagian v. Cepeda (C.A. 2nd, June 26, 2025): Invalidated a 3-day pay-or-quit notice for lacking service date and clear deadline.  Prompted revision of notice form.

In Eshagian v. Cepeda, a California appellate court ruled that a landlord's three-day notice to pay rent or quit was invalid under Code of Civil Procedure § 1161(2), and thereby vacated a judgment for unlawful detainer. The case arose when landlord Joseph Eshagian served tenant Manuel Cepeda with a notice for unpaid rent, but the document failed to clearly specify the start and end dates of the three-day period (excluding weekends and holidays), the exact method and location for payment (it listed only Cepeda's unit number instead of a full address), and an explicit statement that nonpayment would result in forfeiture of possession. 

This decision reinforces the strict statutory requirements for three-day notices, which form the foundation of any eviction for nonpayment of rent in California. Defective notices can invalidate the entire unlawful detainer complaint at the pleading stage, forcing landlords to restart the process or pursue alternative remedies like a breach-of-contract suit, potentially costing time, money, and lost rent. To avoid such pitfalls, Harris & Rosales has created updated notice forms and guidelines.

Gogal v. Deng (C.A. 4th, July 22, 2025): Lease caps on attorney fees/costs enforceable, even in retaliatory eviction wins under Civ. Code § 1942.5. But note: California Supreme Court has agreed to review this decision and whether parties can agree to waive this right.

In Gogal v. Deng, tenants Michael Gogal (a licensed attorney) and his wife Hildy Baumgartner-Gogal successfully sued their landlords for retaliatory eviction after being evicted following complaints about habitability issues.  The lease included a clause that capped recoverable litigation costs and attorney’s fees at $1,000. After successfully suing the landlords for retaliatory eviction, the tenants were awarded a monetary judgment and attorney’s fees exceeding the $1,000 cap. Additionally the court awarded nearly $14,000 in litigation costs, reasoning that the lease cap would conflict with the public policy intent of California Civil Code § 1942.5 which protects tenants from abusive landlords.

On appeal, the court rejected the award and enforced the $1,000 cap in the lease.  The court held that although California Civil Code § 1032(b) allows prevailing parties to recover costs “as a matter of right,” it does not prohibit parties from waiving this right by agreement.  The court pointed to California Civil Code § 3513 which provides that anyone “may waive the advantage of a law intended solely for their benefit,” but failed to address the second half of section 3513 which states, “a law established for a public reason cannot be contravened by a private agreement.”  The court also did not address Section 1953 of the California Civil Code, a statute which declares certain lease terms void if they are “contrary to public policy.” 

Notably, the California Supreme Court has accepted an appeal to review the appellate court’s decision and will examine whether the lease cap violated California Civil Code § 1953.  While we wait for the Supreme Court’s decision, the Supreme Court has said that it will not depublish the appellate court’s opinion and it "may be cited, not only for its persuasive value, but also for the limited purpose of establishing the existence of a conflict in authority.”  

In March 2020, California implemented extensive eviction moratoriums to protect renters impacted by the pandemic, including statewide measures under AB 3088 (expiring February 2025) and local ones in cities like Los Angeles and counties like Alameda. These barred evictions for nonpayment of rent if tenants self-certified COVID-related hardship, while allowing back rent recovery post-moratorium. Most protections ended by mid-2022, though some local safeguards lingered, leading to over $981 million in unpaid rent in LA alone by late 2022.  

Various lawsuits challenging these moratoriums have been moving their way through the courts.  

In GHP Mgmt. Corp. v. City of Los Angeles, the Ninth Circuit upheld LA's COVID eviction moratorium as a valid regulatory action.  In Darby Development Co. v. United States, the Federal Circuit held that when the government prevents landlords from removing nonpaying tenants, essentially requiring private property owners to provide housing for free, it can amount to a physical taking under the Fifth Amendment.  On June 30, 2025, the U.S. Supreme Court declined the opportunity to review the GHP decision even though there appears to be a split among federal circuit courts of appeals on the issue.  In November 2025, the federal government opted not to seek U.S. Supreme Court review of the Darby decision leaving the split between circuits unresolved.  

There was also recent hubbub about the announcement by Fannie Mae and Freddie Mac that they would be relaxing their requirements on lenders related to the 30-day eviction notice requirement under the CARES Act, a COVID-era federal law.  However, the 30-day notice provision has no expiration date and remains in effect as a federal statute.  Therefore, the best practice is to continue using the 30-day notice for any property that meets the definition under 15 U.S.C. § 9058, including properties with federally-backed mortgages.   

Los Angeles: Immigration Emergency Declaration. On October 14, 2025, Los Angeles County approved a local state of emergency tied to federal immigration enforcement.  The declaration signaled an ever-growing use of emergency powers for housing policy.  

Typically, local emergency declarations are reserved for natural disasters or public safety threats such as wildfires or earthquakes. In its proclamation, the county cited economic and social disruptions such as workplace absences, business closures and strain on local institutions as meeting the legal definition of an emergency under California Government Code section 8558(c).  County officials say more than 5,000 immigration arrests have taken place.  

The emergency declaration allows officials to declare an eviction moratorium, offer rent relief and legal aid, and redirect county resources.  An eviction moratorium proposal has not yet been introduced, but an online portal for rent relief applications opens on December 17.  Rent relief will be paid directly to landlords for up to 6 months of rent, but no more than $15,000, for tenants who are at or below 80% of the Area Median Income and who demonstrate a sudden loss of income due to emergency conditions. The County also cited the emergency declaration (as well as other emergency declarations) to justify an extension through the end of December 2025 on caps to rent limits and a prohibition on evictions following by re-renting at a higher rate during the protected period.   

Los Angeles: Right to Counsel.  This year the city as well as county of Los Angeles enacted Right to Counsel ordinances that guarantee free legal representation to low-income tenants (≤80% Area Median Income) facing eviction. Both aim to reduce evictions and homelessness by “leveling” the courtroom playing field where approximately 90% of landlords have lawyers but only ~10% of tenants are represented.  Similar programs elsewhere cut evictions by 20-50% because represented tenants file more defenses leading to longer trials, more settlements, and lower success rates for landlords.

The ordinances require official "Right to Counsel" notices to be posted in common areas and provided at lease signing, with any eviction notice, with any notice for termination of housing subsidy, and with any Section 8 correspondence that may result in termination of subsidy. The forms must be provided in English and in the tenant’s primary language (if known).  Both the city and the county have created specific forms for this purpose. Noncompliance can lead to dismissal of eviction actions and awards of attorney fees to tenants.  Additionally, the ordinances impose strict penalties (fines up to $2,500/day, potential misdemeanor charges).  

San Diego: Broad Limits on Rental Fees.  On November 4, 2025, the San Diego County Board of Supervisors voted to move forward with a proposal to limit fees that housing providers can impose on tenants.   The county measure would cap most add-on fees at 5% of monthly rent, limit late fees to 2% with a seven-day grace period, prohibit monthly pet fees while allowing refundable pet deposits, and ban charges for services necessary to maintain habitability, such as pest control and valet trash.  The city of San Diego has advanced a similar measure.