Do California Landlords Have to Return Security Deposits Electronically?
Do California landlords have to return security deposits electronically? Beginning in 2026, new rules apply when a landlord received a tenant’s security deposit or rent electronically. Learn when electronic refunds are required, what notice landlords must provide, how the 21-day deadline applies, and what changes when there are multiple tenants. A practical guide for landlords and rental property owners in Newport Beach, Costa Mesa, Laguna Beach, and throughout California.
California’s security deposit rules changed on January 1, 2026. If a tenant paid the security deposit—or even rent—electronically, a California landlord may now be required to return the remaining security deposit electronically.
That is a significant change for landlords accustomed to simply mailing a check after a tenant moves out.
The new rules also create another requirement that may be easy to overlook: in many cases, the landlord must affirmatively notify the tenant in writing of the tenant’s right to receive the security deposit electronically.
For rental property owners in Newport Beach, Costa Mesa, Laguna Beach, and throughout California, here’s what the new law means—and how to handle it.
The Short Answer: Yes, in Many Cases
Effective January 1, 2026, California Civil Code § 1950.5(h)(1)(A) establishes a new rule for electronically paid security deposits and rent.
If the landlord received the security deposit or rental payments electronically, the landlord generally must return the remaining security deposit electronically to:
- a bank account or other financial institution designated by the tenant in writing; or
- another electronic or virtual payment method available to the landlord, if the tenant agrees to that method in writing.
The landlord and tenant can instead agree in writing to another return method, including a traditional paper check.
This is an important distinction.
The law does not apply only when the original security deposit was paid electronically.
It also applies when the landlord received rental payments electronically from the tenant.
C.A.R.’s discussion of the 2026 law similarly describes electronic return as the default when the landlord received the security deposit or rent electronically, unless another method is agreed upon in writing.
What Counts as an Electronic Payment?
The statute is written broadly around receiving the security deposit or rental payments electronically.
So landlords should pay attention to how money was actually collected during the tenancy.
If your tenant has been paying rent through an electronic payment system, bank transfer, property-management platform, or another electronic method, you should not automatically assume that mailing a traditional security deposit check at move-out satisfies the new procedure.
Instead, determine whether § 1950.5’s electronic-return provisions apply and obtain the tenant’s written designation of the appropriate account or agreed electronic payment method.
The Tenant Still Has to Give the Landlord the Necessary Information
This is an important practical point.
The statute requires electronic return to a bank account or other financial institution designated by the tenant in writing.
So the landlord is not expected to guess where the money should go.
The tenant needs to provide the necessary information.
Depending upon the method being used, that may include the financial institution, routing number, account number, or other information necessary to complete the transfer.
Alternatively, another electronic or virtual method available to the landlord can be used if the tenant agrees to it in writing.
For landlords and property managers, documenting that designation is important.
Can the Landlord and Tenant Agree to a Paper Check Instead?
Yes.
California Civil Code § 1950.5 expressly allows the landlord and tenant to enter into a written agreement designating another method of return.
That alternative can include:
- personal delivery; or
- a check payable to the tenant and mailed by first-class mail to an address provided by the tenant.
So the new law does not eliminate paper checks.
Rather, where the electronic-return provisions apply, the landlord and tenant should have a written agreement if they want to use another method.
There’s Another New Requirement: The Landlord Must Notify the Tenant
This is perhaps the part of the law most likely to be overlooked.
If the landlord received the security deposit or rental payments electronically, § 1950.5 generally requires the landlord to notify the tenant in writing of the tenant’s right to receive the security deposit electronically.
The statute requires that notice within a reasonable time after notification of either party’s intention to terminate the tenancy, or before the end of the lease term.
C.A.R.’s 2026 new-laws guidance likewise explains that upon termination, the landlord must provide notice of the tenant’s right to receive the deposit electronically when the applicable payments were received electronically and there isn’t already a written agreement providing otherwise.
This means landlords should think about electronic security deposit return before Day 21, not when the deadline is about to expire.
When Is the Electronic-Return Notice Not Required?
The statute identifies exceptions to this particular notice requirement.
For example, the notice requirement does not apply when the landlord and tenant have previously entered into a written agreement designating another method for returning the security deposit.
The statute also contains an exception when the tenancy is terminated pursuant to subdivisions (2), (3), or (4) of Code of Civil Procedure § 1161.
Because termination circumstances can vary significantly, landlords dealing with an eviction or unusual termination should consider the specific statutory provisions applicable to that tenancy.
Example: A Newport Beach Tenant Paid Rent Online Every Month
Consider a tenant renting a condominium in Newport Beach.
The tenant originally paid a $5,000 security deposit by check.
But for the next three years, the tenant paid monthly rent electronically through the landlord’s property-management system.
At move-out, $4,500 of the deposit remains after lawful deductions.
A landlord might assume:
“The security deposit wasn’t paid electronically, so I’ll just mail the tenant a $4,500 check.”
Under the current statute, that analysis is incomplete.
The electronic-return provision applies if the landlord received the security deposit OR rental payments electronically.
Because the landlord received rent electronically, the electronic-return provisions may apply even though the original security deposit was paid by paper check.
That is an important change for California rental property owners.
What If the Tenant Never Provides Bank Information?
This presents a practical issue.
The statute says the landlord shall return the deposit electronically to a bank account or other financial institution designated by the tenant in writing, or through another available electronic or virtual method if agreed to in writing.
At the same time, California law generally requires the landlord to account for and return the remaining security deposit no later than 21 calendar days after the tenant vacates.
California Courts likewise explains that landlords generally have 21 days after move-out to return the security deposit or return the remaining balance together with the required itemized accounting.
This is precisely why landlords should request the necessary electronic-payment information early rather than waiting until Day 20.
The statute does not expressly provide a clear automatic extension of the 21-day deadline simply because the tenant fails to provide the requested banking information.
Accordingly, landlords should document their written notice and attempts to obtain the tenant’s designation and obtain transaction-specific legal advice when the tenant fails to provide information necessary to complete the required return.
I would be cautious about turning the tenant’s failure to respond into an assumption that the landlord can simply ignore the 21-day deadline.
What If There Are Multiple Tenants?
This is an important exception—and one we address separately in our article “What Happens to a Security Deposit When Multiple Tenants Disagree in California?”
When multiple adult tenants reside in the unit, Civil Code § 1950.5(h)(1)(C) provides a specific procedure.
Absent a qualifying written mutual agreement between the landlord and all adult tenants, the remaining security deposit is returned by a check payable to all adult tenants on the rental or lease agreement when the tenancy terminates.
C.A.R.’s current guidance summarizes the distinction similarly: when there are multiple tenants, the deposit is returned by a check made out to all tenants unless otherwise agreed in writing.
If the landlord and all adult tenants enter into the written agreement permitted by § 1950.5(h)(1)(C), however, the agreement can specify how the deposit will be divided and can provide for electronic deposits to financial accounts designated by the individual tenants.
That is why landlords should treat a single-tenant electronic refund and a multiple-tenant security deposit as different situations.
Does the Itemized Security Deposit Statement Have to Be Sent Electronically Too?
No—not automatically.
This is another important distinction in the new law.
The rules governing return of the money and delivery of the itemized security deposit statement are not identical.
Under § 1950.5(h)(1)(B), the itemized statement is generally furnished by personal delivery or first-class mail.
The landlord and tenant can mutually agree to have the statement emailed to an account provided by the tenant or mailed to an address provided by the tenant.
So don’t assume:
“The deposit is being returned electronically, therefore everything must be emailed.”
California law treats the refund and the accounting as separate issues.
Don’t Forget the 21-Day Deadline
The new electronic-return rules did not eliminate California’s existing security deposit deadline.
Generally, no later than 21 calendar days after the tenant vacates, the landlord must provide the required itemized statement and return the remaining security deposit.
California Courts confirms the general 21-day rule and explains that when deductions are made, the landlord must return the remaining balance with an itemized statement explaining the deductions.
And security deposit compliance now involves considerably more than simply cutting a check.
California landlords may also need to address photographs, invoices and receipts, explanations of deductions, good-faith estimates when work cannot be completed in time, and other requirements under § 1950.5.
A Practical Procedure for California Landlords
For landlords who receive rent or security deposits electronically, we recommend making electronic-return compliance part of the standard move-out process.
Once notice of termination has been given or the lease is approaching its end, determine how rent and the security deposit were received.
If the electronic-return provisions apply, provide the required written notice and ask the tenant to designate the account or other agreed method for receiving the refund.
Document the tenant’s response.
If another return method is desired, put that agreement in writing.
And don’t wait until the end of the 21-day period to start figuring it out.
For landlords using professional property management, this is exactly the type of statutory change that should be incorporated into standardized move-out procedures.
Frequently Asked Questions
Does a California landlord have to return a security deposit electronically in 2026?
If the landlord received the security deposit or rental payments electronically, California Civil Code § 1950.5 generally requires the remaining security deposit to be returned electronically to a bank account or other financial institution designated by the tenant in writing, subject to the statute’s exceptions and alternative written agreements.
What if the security deposit was paid by check but rent was paid electronically?
The electronic-return provision can still apply. The statute applies when the landlord received the security deposit or rental payments electronically.
Does the tenant have to provide bank information?
The statute requires the electronic return to be made to a bank account or other financial institution designated by the tenant in writing. Another electronic or virtual method available to the landlord may be used if agreed to by the tenant in writing.
Can a California tenant ask for a paper security deposit check instead?
Yes. The landlord and tenant may enter into a written agreement designating another return method, including personal delivery or a check mailed by first-class mail to an address provided by the tenant.
Does the landlord have to tell the tenant about electronic return?
Generally, yes, when the landlord received the security deposit or rental payments electronically and the statutory notice requirement applies. Section 1950.5 requires written notification of the tenant’s right to receive the deposit electronically within the timeframe established by the statute.
Do these electronic refund rules apply when there are multiple roommates?
Multiple adult tenants are subject to a separate provision in § 1950.5(h)(1)(C). Unless the landlord and all adult tenants enter into the appropriate written agreement, the statutory default is a check payable to all adult tenants on the rental or lease agreement at termination.
Is the security deposit accounting also required to be emailed?
No. The statute separately addresses delivery of the itemized statement. Personal delivery or first-class mail remains the default, subject to the alternative methods permitted by agreement under § 1950.5(h)(1)(B).
Why This Matters for Newport Beach, Costa Mesa and Laguna Beach Property Owners
California rental-property laws continue to become more detailed.
For owners of rental homes and investment properties in Newport Beach, Costa Mesa, Laguna Beach, Corona del Mar, Newport Coast, and surrounding Orange County coastal communities, compliance increasingly requires systems—not simply good intentions.
A missed notice, an outdated move-out procedure, or an assumption based on how security deposits were handled five years ago can create unnecessary risk.
At Lucas Real Estate Group, property management is part of a broader approach to real estate ownership.
Devin R. Lucas is a California Real Estate Attorney, Real Estate Broker, and REALTOR®. Courtney Lucas is a CPA, licensed Real Estate Salesperson, and REALTOR®.
Together, we combine practical real estate experience with legal and tax knowledge to assist property owners with leasing, property management, real estate sales, and the broader issues that come with owning California real estate.
Through Lucas Real Estate Group, in partnership with Coldwell Banker Newport Beach and the Coldwell Banker Global Luxury program, we provide full-service real estate sales and property management throughout Newport Beach, Costa Mesa, and surrounding Orange County coastal communities.
Whether you’re planning to hold, professionally manage, or eventually sell your Newport Beach, Costa Mesa, or Laguna Beach rental property, our goal is to protect your investment while making ownership easier.
Questions or Need Help?
Thinking of selling California real estate or looking for professional property management? We would love the opportunity to assist.
We provide full-service real estate sales and property management in Newport Beach, Costa Mesa and surrounding Orange County communities. If you are seeking to sell or professionally manage your home or investment property, call or email anytime for a free brief consultation:
info@lucas-real-estate.com | 949-478-1623
— Devin Lucas
Author Devin R. Lucas is a Real Estate Broker, REALTOR® and Real Estate Attorney specializing in Newport Beach, Costa Mesa, and Orange County coastal communities. Courtney Lucas, a licensed CPA, Real Estate Salesperson, and REALTOR®, provides financial insight alongside real estate services. Together, they lead Lucas Real Estate Group, operating in conjunction with Coldwell Banker.
Lucas Real Estate Group assists clients with California real estate sales, property management, real estate legal matters, and real estate tax issues.
If you’re selling a property, seeking REALTOR® services, buying a home, or looking for property management services, contact our office for a complimentary initial discussion.
For discussions requiring real estate legal advice, private family sales, family transfers, or tax-related matters, please schedule a paid one-hour consultation via Zoom, phone, or in person.
Sources & Additional Reading
California Civil Code § 1950.5 — Residential Security Deposits
Section 1950.5(h)(1)(A) contains California’s electronic security deposit
return requirements, including electronic payments, written tenant
designations, alternative methods of return, and the landlord’s notice
requirement. Section 1950.5(h)(1)(B) addresses delivery of the itemized
statement, while § 1950.5(h)(1)(C) establishes special rules for multiple
adult tenants.
California Assembly Bill 414 (2025)
AB 414 amended Civil Code § 1950.5 to establish the electronic security
deposit return provisions discussed in this article. The amendments became
effective January 1, 2026.
California Courts — Guide to Security Deposits in California
California Courts explains the general 21-day deadline for returning a
security deposit, permissible deductions, documentation requirements, and
remedies involving security deposit disputes.
California Association of REALTORS® — 2026 New Laws
C.A.R.’s 2026 legal update discusses AB 414, including electronic return
when security deposits or rental payments were received electronically,
the tenant-notification requirement, and the different procedure applicable
to multiple tenants.
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