Do California Landlords Have to Return Security Deposits Electronically? AB 414 Explained

Often, yes. Since January 1, 2026, if you received the security deposit or rent payments from the tenant electronically, you must return the remaining deposit electronically too, unless you and the tenant agree in writing on another method (Civil Code §1950.5(h)(1)(A)(ii)). If neither the deposit nor any rent came in electronically, the older rule still applies: personal delivery, or a check mailed first-class (Civil Code §1950.5(h)(1)(A)(i)).

Is it the tenant's choice or yours?

Neither, entirely. The trigger is how you were paid, not whether the tenant asks. But the destination is the tenant's to set. The refund goes to a bank account or other financial institution the tenant designates in writing, or by any electronic or virtual method available to you if the tenant agrees to it in writing (Civil Code §1950.5(h)(1)(A)(ii)(I)). You can't pick a payment app on your own, and you can't default to a check just because it is easier.

To use a different method, such as personal delivery or a mailed check, you and the tenant need a written agreement designating it (Civil Code §1950.5(h)(1)(A)(ii)(I)). The statute does not name specific apps or services; the test is that the method is electronic or virtual, available to you, and agreed to in writing.

You must tell the tenant about the option

Within a reasonable time after either side gives notice to end the tenancy, or before the end of the lease term, you must notify the tenant in writing of their right to receive the deposit electronically (Civil Code §1950.5(h)(1)(A)(ii)(II)). The statute says "a reasonable time" and gives no number of days, so send it early.

The notice is not required if you and the tenant have already signed a written agreement designating another return method, or if the tenancy is terminated under Code of Civil Procedure §1161(2), (3) or (4) (Civil Code §1950.5(h)(1)(A)(ii)(II)). The statute does not spell out what happens if a tenant never gives you an account, so ask early and keep the request in writing.

How it fits the 21-day deadline

Nothing about timing changed. You still have until 21 calendar days after the tenant vacates to furnish the itemized statement and return what remains (Civil Code §1950.5(h)(1)). Electronic return is only the method; a late transfer is still a late refund. See our 21-day deadline article for what the statement must include.

The refund method and the statement delivery are separate rules. The itemized statement goes by personal delivery or first-class mail unless you and the tenant mutually agree that it may be emailed to an account the tenant provides, or mailed to an address the tenant provides (Civil Code §1950.5(h)(1)(B)). That agreement can be made at the start of the tenancy or at any time during or after it.

Shared tenancies: watch the default

If multiple adult tenants live in the unit, the default is a single check payable to all adult tenants on the lease, unless you and all of them sign a written agreement saying how the deposit will be returned (Civil Code §1950.5(h)(1)(C)(i)). That agreement may provide for electronic deposit to an account designated by each adult tenant, with allocation percentages if the deposit is divided (Civil Code §1950.5(h)(1)(C)(ii)). For roommates, get that agreement signed by everyone before move-out.

What non-compliance can cost

A landlord who, in bad faith, fails to comply with the return requirements can lose the right to claim any amount of the deposit (Civil Code §1950.5(h)(7)). Bad-faith retention can also bring statutory damages of up to twice the deposit, on top of actual damages (Civil Code §1950.5(m)). Bad faith is a finding a judge makes, but skipping a required written notice is not a fact you want in the file.

A simple checklist

1. Check how the deposit and rent reached you. Any electronic payment puts you under the electronic-return rule.
2. When notice to end the tenancy is given, send the written notice of the tenant's right to electronic return.
3. Get the tenant's account (or another agreed electronic method) in writing, or a written agreement for a different method.
4. Calendar day 21 from move-out and send the itemized statement, with the bills and photos, by mail or personal delivery, or by email if you have the written agreement.
5. Keep the notice, the agreement and the transfer confirmation with the tenant's file.

Related guides

• California Security Deposit Return Deadline: The 21-Day Rule
• California Security Deposit Law 2026: How Much Can a Landlord Charge?
• California Landlord Photo Documentation Requirement for Security Deposits

This article is informational, not legal advice. For your specific situation, especially anything disputed, talk to a California landlord-tenant attorney.