A Guide to the California Department of Real Estate

April 5, 2019

Being a property manager means leasing to tenants, collecting rent, and staying on top of building maintenance and repair. In the state of California, the entire process is regulated by the California Department of Real Estate.

Rules that pertain to property management appear in 15 different state government codes. If you run a property management business, you’ll be subject to each of these regulations. As well as others that affect other industries in California, including insurance and taxation regulations.

Here’s what you’ll need to know about how the California Department of Real Estate regulates the rental industry.


Licensing requirements in California

If you’re a property manager in the Golden State, you’re required to have a real estate broker’s license or work under someone who does. There is an exception to this law, but it’s only for property owners who serve as property managers for their own buildings. If you’re a broker-applicant, the state department of real estate requires that you provide documentation of both your educational training and experience in the field.

beach in california at sunset with a pink and blue sky in the background

You’ll also be required to pass a state licensing exam and complete continuing education requirements. If you fail to uphold any of these requirements, your license can be revoked. While property managers aren’t expressly required to hold separate certifications, many choose to do so anyway.


Minimum habitability standards

Like most states, California requires landlords and property managers to maintain minimum habitability standards. This means each rental unit you manage must meet a bare minimum standard for habitability, which is consistent with the building, health, and safety codes in the state. If you fail to maintain units according to this standard, your tenants can vacate the property without paying rent. You are then barred from taking retaliatory action against them.


Security deposits

In the state of California, security deposits cannot be more than two times the monthly rent for unfurnished homes or apartments. Tenants are entitled to ask for a pre-vacation inspection, at which time you as a landlord are required to specify all issues that could affect the return of the security deposit. Once a tenant moves out, you must return the full deposit or return a partial deposit with fully documented subtractions within 21 days.

If you spend more than $126 on cleaning costs, repairs, or anything else, you must document and include this with the return of the security deposit. The law also states that tenants have up to four years to dispute a partial security deposit return.


Rent control

Rent control is designed to ensure a supply of affordable housing at all times. It restricts rent increases, imposes limits on evictions, and holds landlords to a set of predefined standards. In 2018, at least 15 cities throughout the state of California were subject to rent control legislation.

These cities included Berkeley, Oakland, Los Angeles, and San Francisco. In San Francisco, for example, rent control ordinances mean that landlords and property managers must inform tenants of their rights, including their right to contact the state rent board, pay interest on all security deposits, and more.


Fair Housing Act

The Fair Housing Act is designed to protect tenants. By prohibiting discrimination on the basis of race, color, national origin, religion, sex, disability or familial status, The Fair Housing Act ensures all tenants have access to safe, affordable, quality housing. As such, landlords must understand and comply with the Fair Housing Act.

This means, for example, that you are prohibited from asking if a tenant is married, even in casual conversation. It also means you must allow service dog for tenants who are disabled. If you violate the Fair Housing Act, you’re subject to substantial fines and the potential of a civil suit.


Lease agreements

In California, landlords must create tenant leases in the language the parties used to negotiate the lease. For example, if you as a landlord (or your registered agent) are renting to a Spanish-speaking tenant, and you spoke Spanish as you agreed on the lease terms, the paper lease must also be written in Spanish.


Becoming a better property manager

California is a great state to be a property manager. But, you must understand the rules and regulations laid out by the California Department of Real Estate. When you know what’s expected of you, you can steer clear of hefty fines and red tape.

grey couch and tile fireplace in the living room of a San Francisco apartment managed by Blueground in California

Additionally, this understanding ensures you can better serve your tenants. Looking for a way to simplify your life as a landlord or property manager? Consider bringing in someone else to handle part of your load. While you could Airbnb your property, this is a safer option for both you and your home.

Working with a real estate professional like Blueground will streamline your days and free up your day from time-consuming landlord duties. As your primary tenant, Blueground furnishes and rents out your apartment to senior business executives. All the while, Blueground pays out monthly rent regardless of the occupancy rate.

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