1 Confusing deposit rules with broker trust fund rules

A security deposit is not extra operating cash. California Civil Code section 1950.5 limits what residential deposits can cover, how deductions are documented and when the remaining money must be returned. It does not impose a universal DRE trust bank account requirement on every owner who holds a deposit. [3]

For a broker receiving rents or deposits for others, separate rules apply. Business and Professions Code section 10145 generally requires funds not immediately delivered to the principal or neutral escrow to go into a broker trust account. Regulation 2832 generally requires placement within three business days after receipt, subject to exceptions. Separate beneficiary records and monthly reconciliation for months with activity are also required. [1, 2]

On the landlord side, section 1950.5 generally requires the deposit balance and an itemized accounting within 21 calendar days after the tenant vacates. Deductions must be permitted by law; ordinary wear and tear is not chargeable damage. Current rules also require move-in photos for tenancies beginning on or after July 1, 2025, and before-and-after photos for repair or cleaning deductions under the requirements effective April 1, 2025. Required photographs must accompany the supporting deduction documentation. [3]

2 Treating a generic lease as a complete compliance system

A downloaded lease can omit information the property needs or contain terms that do not fit the tenancy. Disclosures depend on the property, its age and condition, the tenancy and applicable law. There is no single list of addenda that makes every California rental compliant.

For example, federal lead-based paint disclosure requirements generally apply to most housing built before 1978, with specified exceptions. Before the tenant signs, required materials can include the lead hazard pamphlet, known hazard information and available records, plus the required lease disclosure language. A generic reference to lead paint may not satisfy those duties. [5]

Review the lease together with the property’s disclosure package, rent and termination requirements, and any applicable local rules. A real estate license does not guarantee that every document is correct or authorize a manager to give legal advice.

A licensing problem also does not automatically make every tenant lease void. Section 10136 concerns a broker or salesperson’s ability to sue for compensation for licensed acts. That is a different question from the owner’s lease rights or a tenant’s obligations. [1]

3 Using discriminatory advertising or screening practices

The risk starts with the listing and continues through application review, occupancy policies and requests for disability accommodations. California’s Fair Employment and Housing Act generally protects applicants and tenants based on characteristics including race, religion, disability, sex, familial status and source of income. [4]

Phrases such as “no kids” or “no Section 8” can create serious problems. Voucher assistance is a protected source of income. Occupancy standards require careful review rather than assumptions about which households belong in a property. Written criteria should be lawful, consistently applied and allow for required reasonable accommodations. [4]

Do not rely on a single fine amount to measure the risk. Fair housing exposure depends on the claim and forum. Available remedies can include financial losses, emotional distress damages, injunctions, civil penalties or punitive damages, and attorney’s fees. [4]

4 Letting repair requests stall without a response plan

A landlord’s duty to provide habitable housing continues when day-to-day work is delegated to a manager. California’s Attorney General identifies basic requirements such as working plumbing, heat and electrical equipment, effective weather protection and freedom from vermin, citing Civil Code section 1941.1. [6]

An unanswered leak, failed heater or pest complaint can become more costly while the owner assumes someone else is handling it. Repair priorities should reflect the condition and urgency, with a clear escalation process. There is no single repair deadline that fits every issue.

A useful management process records the report, response, access arrangements, vendor work and follow-up. Owners and managers should agree on emergency contacts and spending authority before a problem occurs.

5 Assuming a business name or broker connection is enough

California generally requires the appropriate real estate license for leasing, soliciting tenants or collecting rent for another person for compensation or in expectation of compensation. A salesperson must perform licensed work under the responsible broker to whom they are licensed. Simply being employed by a brokerage does not authorize every unlicensed employee to perform licensed acts. [1]

Some roles are exempt. Section 10131.01 covers resident apartment managers and their employees, and permits specified tasks by qualifying supervised employees at residential apartment properties. Section 10133.2 addresses clerical functions. Owners ordinarily can manage their own rentals. The actual role and conditions matter; do not assume a family connection or job title supplies an exemption. [1]

Unlicensed activity can bring a DRE administrative fine of up to $2,500 per unlicensed act. Separately, section 10139 provides criminal penalties for an individual of up to $20,000, up to six months in county jail, or both, and a fine up to $60,000 for a corporation. The $20,000 amount should not be presented as an automatic fine “per incident.” [1, 7]