California Electronic Security Deposit Refund Law 2026

AB 414 amends Civil Code section 1950.5 to say that if a landlord received the tenant's security deposit or rental payments electronically, the landlord must return the remainder of the security deposit electronically to a bank account or other financial institution the tenant designates. The trigger is how money moved into the landlord's hands during the tenancy, not how the lease itself was signed or how notices were exchanged.

[Cite: AB 414, amending Civil Code section 1950.5(h)]

A landlord who's accepted rent through a bank transfer, a property-management portal, or a payment app at any point in the tenancy falls under this requirement when the tenancy ends, even if a particular month's rent was occasionally paid by check.

The statute doesn't limit "electronic" to one specific payment rail. Direct deposit, ACH bank transfer, and other electronic or virtual payment methods a landlord already has available to them all qualify on both the incoming and outgoing side. What matters is that the return method mirrors how the deposit or rent actually arrived, not that it uses a specific named platform.

[Cite: AB 414, amending Civil Code section 1950.5(h)]

The tenant is the one who designates which account or method receives the refund. A landlord isn't required to guess at a tenant's banking details or pick a method unilaterally; the tenant identifies where the money should go.

AB 414 builds in an opt-out. If landlord and tenant agree in writing to a different return method, a paper check instead of an electronic transfer, for example, that agreement controls instead of the default electronic requirement. This gives both sides flexibility for situations where electronic transfer isn't practical, without eliminating the underlying default.

[Cite: AB 414, amending Civil Code section 1950.5(h)]

A landlord relying on this exception should get the alternative arrangement in writing rather than treating a tenant's silence, or a single conversation, as sufficient agreement to skip the electronic-return default.

Under the amended statute, landlords must notify tenants in writing that they have the right to receive their deposit refund electronically. This notification requirement exists independently of whether a given tenant ultimately chooses the electronic option, so a landlord's compliance obligation doesn't disappear just because a tenant ends up preferring a check.

[Cite: AB 414, amending Civil Code section 1950.5(h)]

Before this change, an itemized statement of deductions generally had to be delivered personally or by first-class mail unless the parties agreed otherwise after the tenancy ended. AB 414 adds email as an explicit option: if landlord and tenant mutually agree, the itemized statement can go to an email address the tenant provides instead of a physical mailing.

[Cite: AB 414, amending Civil Code section 1950.5(h)]

This is an added option, not a replacement for mail or personal delivery. A landlord without a tenant's agreement to use email should continue using one of the existing delivery methods.

For units with more than one adult tenant on the lease, the default rule remains a single refund check made payable to all adult tenants listed on the agreement. That default hasn't changed. What AB 414 does is let landlord and tenants agree in writing to a different arrangement, whether that's splitting the refund electronically among individual tenants or designating one tenant to receive it, rather than being locked into a single joint check in every case.

[Cite: AB 414, amending Civil Code section 1950.5(h)]

Without that written agreement, the single joint-check default still applies, and any electronic version of that default check would still need to go to an account or method all listed tenants have agreed to.

It's worth being specific about the boundaries here, since this law is narrow by design. The 21-day deadline for returning a security deposit after a tenant moves out is unchanged. The rules governing what a landlord can lawfully deduct from a deposit, unpaid rent, damage beyond normal wear and tear, cleaning costs where allowed, are unchanged. AB 414 only addresses the mechanics of how the remaining balance and the itemized statement get delivered to the tenant.

A landlord who's already compliant with the 21-day deadline and deduction rules mainly needs to update the payment method and notification practice, not the underlying deposit-handling process.

It helps to see AB 414's change inside the broader deposit-return framework it's operating in, since that framework itself is unchanged. Under existing Civil Code section 1950.5, a landlord with no deductions to make must return the full deposit within 21 days of the tenant vacating. If deductions are being taken, the landlord generally must provide an itemized statement along with copies of receipts for the charges, also within that 21-day window, or, if repair work isn't finished by then, a good-faith estimate followed by actual receipts within a further 14 days.

[Cite: California Civil Code section 1950.5]

AB 414 slots into that existing timeline without altering it. The 21-day clock still starts when the tenant vacates, the itemization-and-receipts obligation for deductions still applies, and what's new is only the payment rail used for the refund itself and, when both sides agree, the email option for delivering the itemized statement. A landlord who's already disciplined about meeting the 21-day deadline mainly needs to adjust how the money moves, not when.

Property managers updating internal processes for this change generally need to confirm three things before a move-out reaches the 21-day deadline: whether the departing tenant paid rent or the deposit electronically at any point, which account or method the tenant wants the balance sent to if the electronic default applies, and whether a written agreement exists specifying a different method. Building a short intake step into the move-out checklist, asking the tenant to confirm a refund account or reaffirm a written alternative, avoids scrambling to sort this out once the 21-day clock is already running.