California SB 1286: Rosenthal Act Now Covers Business Debt (2026)

 California SB 1286: Rosenthal Act Now Covers Business Debt (2026)

October 8, 2026 | Washington Law Firm 

For decades, California’s Rosenthal Fair Debt Collection Practices Act protected consumers, meaning people who owed money for personal, family, or household purposes. Business debt was largely left out. That changed with Senate Bill 1286, signed in September 2024. In 2025, the Legislature narrowed the law with Assembly Bill 1521. If you are a Los Angeles–area business owner, a personal guarantor of a business loan, or a company that collects commercial accounts, both laws may affect you.

What SB 1286 Changed in California’s Rosenthal Act

SB 1286 (Chapter 522, Statutes of 2024) amended the Rosenthal Act (Civil Code section 1788 and following) to cover a new category called “covered commercial debt.” The main features are:

• Who is protected. Covered commercial debt is money owed by a natural person, not a corporation or LLC, on business-purpose transactions. Sole proprietors are covered, and so are individuals who personally guarantee a business’s obligations. For these debts, the law expressly treats a guarantor as a “debtor.”
• Which debts count. The debt must be owed to a lender, a commercial financing provider, or a debt buyer. The combined amount the person owes to that same creditor cannot exceed $500,000.
• When it applies. The protections apply to covered commercial debt entered into, renewed, sold, or assigned on or after July 1, 2025. A business debt that began before that date and has not been renewed, sold, or assigned since generally falls outside the new rules.
• What collectors cannot do. The Rosenthal Act’s existing prohibitions on harassing, deceptive, and unfair collection conduct now apply to covered commercial debt. Under California law, a “debt collector” can include an original lender collecting its own debt, not just third-party collection agencies.
• Where a guarantor can be sued. When a debt arises from a personal guaranty, the collector may sue in the county where the business is located. This is an exception to the usual rule tying venue to where the debtor resides or incurred the debt.
• No new licensing. The law states that it does not create any additional debt collector licensing requirement for commercial debt.

AB 1521 (2025): Trade Credit and Dealer Financing Exclusions

AB 1521, the Assembly Judiciary Committee’s 2025 omnibus bill (Chapter 200, Statutes of 2025), took effect January 1, 2026. It removed two categories from “covered commercial debt”:

1. Certain vehicle dealer financing. This covers commercial financing transactions of at least $50,000 where the recipient is a vehicle dealer or a dealer affiliate.
2. Trade credit. This is, generally, credit extended by a business that supplies goods, materials, equipment, or related services. The term has its own statutory definition, so the exact wording matters.

In practice, a supplier invoicing customers on net-30 terms is likely outside the Act. A lender, a commercial financing provider, or a debt buyer collecting on a loan or line of credit from a sole proprietor or guarantor may still be inside it.

Personal Guarantors and Small-Business Debt Collection in California

For small-business owners and guarantors: If a lender or debt buyer is pursuing you personally on a business debt of $500,000 or less, you may now have Rosenthal Act rights you did not have before. Abusive or deceptive collection conduct can support claims for damages and statutory penalties. A violation does not erase the underlying debt, but it can change your leverage in negotiation or litigation.

For people weighing bankruptcy or debt relief: Business owners under financial pressure often face aggressive collection on personal guaranties. Knowing whether the Rosenthal Act applies can shape strategy: whether to negotiate, defend a collection lawsuit, assert counterclaims, or seek bankruptcy protection.

For creditors and collectors: Commercial lenders, financing providers, and debt buyers should check whether accounts originated, renewed, sold, or assigned after July 1, 2025 fall within the $500,000 threshold. They should also check whether the trade credit or dealer financing exclusions apply. Collection letters, call scripts, and venue practices may need updating.

Checklist: Is Your Business Debt Covered?

• Is the person being pursued a natural person, such as a sole proprietor or personal guarantor?
• Is the creditor a lender, a commercial financing provider, or a debt buyer?
• Is the total owed to that creditor $500,000 or less?
• Was the debt entered into, renewed, sold, or assigned on or after July 1, 2025?
• Does the trade credit or vehicle dealer financing exclusion apply?

If the answers point toward coverage, the Rosenthal Act’s conduct rules likely govern the collection effort.

Frequently Asked Questions

Does the Rosenthal Act apply to business debt in California?
Yes, in some cases. Since July 1, 2025, it applies to certain business debts owed by individuals, including personal guarantors, when the total owed to one creditor is $500,000 or less.

Does SB 1286 apply to debts owed by a corporation or LLC?
Not to the company itself. Coverage requires a natural person who owes the debt, which includes an individual who personally guaranteed the company’s obligation.

Does SB 1286 apply to trade credit?
No. AB 1521 excluded qualifying trade credit beginning January 1, 2026.

Does a Rosenthal Act violation cancel the debt?
No. A violation can give the debtor claims against the collector, but it does not erase the underlying debt.

The Bottom Line

SB 1286 marked a significant shift by extending California’s debt collection protections beyond consumer debt to individuals who stand behind small-business obligations. AB 1521 has since narrowed that reach. Because the law is new and still being refined, the details of each transaction matter.

If you are facing collection on a business debt or personal guaranty in Los Angeles or elsewhere in Southern California, contact us or call 877-807-2008 to discuss your options.

This article is for general informational purposes only and is not legal advice. Reading it does not create an attorney-client relationship. Laws change, and the application of any law depends on the specific facts. Please consult an attorney about your particular situation.

 

California Landlord-Tenant Law Changes in 2026: 7 Key Updates

Updated October 8, 2026 | Washington Law Firm

California's rental housing laws continue to evolve. Legislative changes that took effect in 2025 and 2026 have introduced new requirements involving rental appliances, security deposit refunds, internet subscriptions, tenant screening, rent payment reporting, and eviction procedures.

Understanding these changes is important for property owners, property managers, and tenants alike. Failure to comply with applicable requirements can result in disputes, financial liability, or challenges in court.

Below are seven important updates to California landlord-tenant law and their practical implications.

1. Landlords Must Provide Working Stoves and Refrigerators in Covered Rentals

Effective January 1, 2026 — Assembly Bill 628  

California Assembly Bill 628 amended the state's minimum habitability requirements.

Under California Civil Code Section 1941.1, covered residential rental units must now include a working stove capable of safely generating heat for cooking and a working refrigerator capable of safely storing food.

The new requirement applies to rental agreements entered into, amended, or extended on or after January 1, 2026.

The law also requires landlords to repair or replace covered appliances subject to manufacturer or government recalls within 30 days of receiving notice of the recall.

Are there exceptions?

Yes. Certain housing arrangements, including qualifying permanent supportive housing, single-room occupancy units, residential hotels, and facilities offering communal kitchens, are excluded from the new appliance requirements.

A tenant may also voluntarily agree to provide and maintain their own refrigerator if the statutory written-lease conditions are satisfied. A landlord cannot make a tenant's provision of a refrigerator a condition of obtaining the tenancy. The tenant must be permitted to request a landlord-provided refrigerator upon 30 days' written notice.

Legal analysis: Because these appliances are now part of the statutory habitability standards for covered rentals, landlords should treat appliance maintenance as a housing-compliance issue rather than merely an optional amenity. However, available remedies depend on the circumstances and applicable law.

Authority: California Civil Code § 1941.1; AB 628, Chapter 342, Statutes of 2025.

2. Electronic Security Deposit Refunds Are Now Required in Certain Cases

Effective January 1, 2026 — Assembly Bill 414

California has modernized its rules governing the return of residential security deposits.

Under amended Civil Code Section 1950.5, when a landlord receives rent or a security deposit electronically, the landlord generally must return the remaining security deposit electronically, unless the parties agree in writing to another method.

The law also requires applicable landlords to notify tenants of their right to receive the refund electronically within the statutory notification period when the tenancy is ending.

Separate rules address refunds involving multiple adult tenants, including written agreements concerning allocation and payment methods.

Importantly, the existing requirement to account for and return security deposits generally within 21 calendar days after a tenant vacates remains in effect.

Legal analysis: Landlords should update their move-out procedures to obtain required payment instructions and written agreements. Tenants should understand that electronic repayment does not eliminate a landlord's right to make lawful deductions for unpaid rent, qualifying damage, or other authorized charges.

Authority: California Civil Code § 1950.5(h); AB 414, Chapter 340, Statutes of 2025.

3. Tenants Have New Rights to Opt Out of Internet Subscription Charges

Effective January 1, 2026 — Assembly Bill 1414

Some California rental properties use bulk internet arrangements in which internet service is bundled into a tenant's housing charges.

Assembly Bill 1414 introduced new protections under Civil Code Section 1942.8.

For residential tenancies falling within the statute, including specified new, renewed, and continuing periodic tenancies on or after January 1, 2026, landlords must allow tenants to opt out of paying for third-party internet service subscriptions offered in connection with the tenancy.

The law does not prohibit landlords from offering bulk internet arrangements. Instead, it protects the tenant's choice whether to pay for the covered subscription.

It also prohibits retaliation for exercising the right to opt out.

Legal analysis: If a landlord violates the statutory opt-out requirement, a tenant may be entitled to deduct the covered subscription cost from rent. Because improper rent deductions can create legal risks, tenants should verify the law's applicability and document their requests before exercising this remedy.

Authority: California Civil Code § 1942.8; AB 1414, Chapter 506, Statutes of 2025.

4. Security Deposit Deductions Now Require More Photographic Documentation

Changes phased in during 2025 — Assembly Bill 2801

California strengthened its security deposit rules through AB 2801.

Under Civil Code Section 1950.5:

• Beginning April 1, 2025, landlords must photograph the rental unit within a reasonable time after the tenant returns possession, before performing repairs or cleaning for which a security deposit deduction will be made, and again after that work is completed.

• For tenancies beginning on or after July 1, 2025, landlords must photograph the unit immediately before or at the beginning of the tenancy.

• When deductions for qualifying repairs or cleaning are made, landlords generally must provide the required photographs and supporting cost documentation with the itemized security deposit statement, subject to statutory provisions.

The law also reinforces restrictions on charging tenants for ordinary wear and tear, preexisting damage, or cleaning that is not reasonably necessary to restore the premises to their initial condition.

Legal analysis: Photographs can help establish whether a deduction reflects tenant-caused damage rather than ordinary deterioration. Landlords should maintain organized, dated inspection records. Tenants should also preserve their own move-in and move-out photographs, inspection correspondence, and payment records.

Authority: California Civil Code § 1950.5(e), (g), and (h); AB 2801, Chapter 280, Statutes of 2024.

5. Many Landlords Must Offer Positive Rent Payment Reporting

Offers required beginning April 1, 2025 — Assembly Bill 2747

Assembly Bill 2747 established a process allowing eligible California tenants to have positive rental payment information reported to qualifying consumer reporting agencies.

Under Civil Code Section 1954.07, covered landlords must offer tenants the option to report qualifying on-time rent payments.

For leases entered into on or after April 1, 2025, the offer must be made when the lease is executed and at least annually thereafter. For leases already outstanding as of January 1, 2025, the initial offer was due by April 1, 2025.

Participation is voluntary for tenants.

A landlord may charge no more than the lesser of $10 per month or the landlord's actual cost of reporting. If the landlord incurs no cost, no fee may be charged.

The law includes exclusions, including many buildings containing 15 or fewer units and certain assisted housing developments. Specific ownership structures can affect whether the small-building exclusion applies.

Legal analysis: The legislation provides some tenants with an opportunity to build credit through documented timely rent payments. Landlords subject to the law should maintain compliant written election forms, track annual offers, and honor tenant opt-out requests. Failure to pay an optional reporting fee is not itself grounds for terminating the tenancy.

Authority: California Civil Code § 1954.07; AB 2747, Chapter 279, Statutes of 2024.

6. Rental Application Screening Fees Face Stricter Rules

Effective January 1, 2025 — Assembly Bill 2493

California Civil Code Section 1950.6 limits when landlords and property managers may charge application screening fees.

Under the revised framework, landlords charging such fees must use one of the legally permitted screening approaches.

One approach generally requires reviewing completed applications in order, providing written screening criteria, approving the first applicant who satisfies those criteria, and avoiding a screening charge unless the application is actually considered.

The alternative allows a qualifying process in which the entire screening fee is refunded to applicants not selected for tenancy, within the statutory timeframe.

A landlord also cannot charge an application screening fee when the landlord knows or should know that no rental unit is available or will become available within a reasonable period.

Legal analysis: The reform is designed to discourage unnecessary screening charges and improve transparency. Prospective tenants should retain copies of application materials and payment receipts. Housing providers should document screening procedures and refund decisions to demonstrate compliance.

Authority: California Civil Code § 1950.6; AB 2493, Chapter 966, Statutes of 2024.

7. Tenants Generally Have 10 Court Days to Respond to an Eviction Lawsuit

Effective January 1, 2025 — Assembly Bill 2347

California extended the standard deadline for responding to an unlawful detainer lawsuit from five court days to 10 court days.

Under Code of Civil Procedure Section 1167, a tenant personally served with an eviction summons and complaint generally has 10 court days to respond.

Court days exclude Saturdays, Sundays, and judicial holidays.

Different service methods can alter the calculation. For example, substituted service or court-authorized posting and mailing involve additional service-completion rules.

Legal analysis: The longer response period provides tenants additional time to seek counsel and prepare a defense, but an eviction lawsuit remains an expedited court proceeding. A tenant who misses the applicable deadline risks a default judgment. Landlords must also calculate response periods correctly before seeking default relief.

This change does not eliminate lawful grounds for eviction or prevent a landlord from pursuing possession through the required legal process.

Authority: California Code of Civil Procedure § 1167; AB 2347, Chapter 512, Statutes of 2024.

What About California Rent Increase Limits in 2026?

Although not a newly enacted 2026 rule, California's Tenant Protection Act remains a critical part of the legal framework.

For many covered properties, Civil Code Section 1947.12 limits annual rent increases to 5% plus the applicable change in the cost of living, or 10%, whichever is lower, over the relevant 12-month period.

These limits have statutory exceptions. Local rent stabilization ordinances may impose stricter requirements.

The applicable percentage also depends on the property's location and the effective date of a rent increase. Landlords and tenants should consult the California Attorney General's current rent-cap guidance rather than assume a single statewide percentage applies everywhere.

Authority: California Civil Code § 1947.12; California Attorney General's rent guidance.

Practical Steps for California Landlords and Tenants

For landlords: Review lease forms and renewal practices, check appliance requirements, update security deposit documentation and refund procedures, review internet subscription charges, and ensure that tenant screening and rent-reporting processes comply with applicable law.

For tenants: Review your lease carefully, keep written records and photographs, understand which protections apply to your property, request required disclosures or refunds where appropriate, and respond promptly to eviction-related court documents.

Both parties should also check applicable municipal ordinances because California state law does not eliminate additional local rental housing protections.

Conclusion

California's 2025 and 2026 landlord-tenant reforms reflect increased emphasis on habitability, transparency, consumer choice, and procedural fairness.

The new rules concerning appliances, security deposits, internet subscriptions, rent reporting, screening charges, and eviction response deadlines can materially affect how residential rental relationships are managed.

Understanding the statutory requirements before a disagreement arises can help landlords and tenants avoid preventable disputes.

Legal Disclaimer

This article is provided for general educational information and is not legal advice. It discusses California law, not Washington law. The application of any statute depends on the circumstances, applicable exemptions, local ordinances, and subsequent legal developments. Readers with California landlord-tenant legal questions should consult a California-licensed attorney. Publication by Washington Law Firm should not be understood as a representation that the firm is authorized to practice California law.

Elon Musk Joins Upcoming Trump Administration: What His Plans to Dismantle Social Security Could Mean for Retirees

 

In a shocking turn of events, Elon Musk has been appointed to a key role in the upcoming Trump administration, with reports indicating that he plans to spearhead efforts to dismantle Social Security. The announcement has sparked widespread concern among retirees, workers, and legal experts alike. Social Security, a cornerstone of the American social safety net since 1935, provides essential financial support to retirees, disabled individuals, and surviving family members of deceased workers. But could Musk truly succeed in dismantling it, and what protections exist for those who rely on it?

The Creation of Social Security

Social Security was established in 1935 during the Great Depression as part of President Franklin D. Roosevelt’s New Deal. At the time, poverty among elderly Americans was rampant, with no universal system in place to provide for aging workers who could no longer support themselves. The Social Security Act aimed to address this crisis by creating a federally funded, payroll-tax-based program to provide retirement benefits. The program faced intense debates during its inception, with critics labeling it as "socialist" and an overreach of federal power. Business groups and fiscal conservatives argued it would discourage individual responsibility and burden employers, while labor unions and progressives championed it as a necessary step toward economic security for all. Despite the opposition, the Act was signed into law, becoming a transformative piece of legislation that has since provided stability to millions of Americans.

Who Will Be Affected?

If Musk’s plan moves forward, the effects could be catastrophic for millions of Americans. Social Security currently serves as a primary source of income for nearly 70 million people, including retirees, individuals with disabilities, and low-income families. Without it, many retirees would face severe financial instability, particularly those who lack significant savings or pensions. Younger generations, who contribute to Social Security through payroll taxes with the expectation of future benefits, would also bear the brunt of these changes.

Who Benefits from Dismantling Social Security?

The dismantling of Social Security would disproportionately benefit certain groups, particularly wealthy individuals and corporations. Social Security is funded through payroll taxes, which are capped at a certain income level, meaning high earners only pay taxes on a portion of their income. Eliminating the program would relieve these individuals of their tax obligations, leading to significant financial savings for the wealthiest Americans. Similarly, corporations that match employee payroll contributions would no longer bear this cost, increasing their profit margins. Some conservative policymakers and think tanks argue that privatizing retirement savings would benefit the financial sector, as it could open up trillions of dollars in investment opportunities. However, these benefits for the wealthy and corporate interests come at the expense of the majority of Americans who rely on Social Security for basic financial security.

Can Social Security Be Dismantled Constitutionally?

The dismantling of Social Security would face significant constitutional and legal hurdles. Social Security is a federally established program funded through payroll taxes under the Federal Insurance Contributions Act (FICA). Any changes to its structure would require Congressional approval, as the program's framework is codified in federal law. Additionally, Social Security is often referred to as an entitlement program, meaning that eligible individuals have a legal right to receive benefits. Courts have previously upheld the constitutionality of Social Security, reinforcing the federal government’s responsibility to administer the program.

Federal Protections Against Threats to Social Security

While Social Security can theoretically be restructured or repealed through legislative action, several federal protections make this difficult. The Social Security Trust Fund is insulated from general government revenue and is funded directly by payroll taxes. This funding mechanism ensures a degree of financial stability. Moreover, widespread public support for Social Security creates significant political resistance to drastic changes. Advocacy groups, unions, and AARP are likely to challenge any attempt to dismantle the program through lobbying, public campaigns, and litigation.

State-Level Protections in California

California, home to one of the largest retiree populations in the country, has state-level programs and protections designed to assist seniors. Programs like Supplemental Security Income (SSI) and state-administered pensions provide additional financial support. California also enforces strong anti-discrimination laws that protect older workers and retirees, ensuring their access to essential benefits. While these programs can offer partial relief, they are not a substitute for the comprehensive coverage provided by Social Security.

Why a Litigation Attorney is Essential for Retirees

For retirees concerned about the security of their Social Security benefits, consulting with a litigation attorney is critical. Attorneys specializing in social welfare law can help retirees navigate complex legal systems, challenge unjust denials or reductions of benefits, and represent their interests in federal court if necessary. In California, where legal frameworks are often intricate, a skilled attorney can also help retirees access state-level resources and protections.

Elon Musk’s proposed plans to dismantle Social Security represent a significant threat to millions of Americans. While constitutional and legislative safeguards provide some reassurance, the potential consequences for retirees and other beneficiaries cannot be understated. Retirees must remain vigilant and prepared to seek legal recourse to protect their entitlements. A qualified litigation attorney can be a powerful ally in ensuring that the promise of Social Security endures for generations to come.

By: Desiree T. Washington, Esq. at Washington Law Firm

California Expands Debt Collection Protections to Commercial Debt with SB 1286

 California has long been a leader in consumer protection, and the passage of Senate Bill 1286 (Stats. 2024, ch. 522) continues that tradition. This new law, effective January 1, 2025, expands the coverage of the Rosenthal Fair Debt Collection Practices Act (RFDCPA) to include certain types of commercial debt. Historically, the RFDCPA only applied to consumer debt, providing safeguards against abusive, unfair, or deceptive collection practices. SB 1286 marks a significant shift in California’s approach to debt collection by extending these protections to small business owners and entrepreneurs.

What Does SB 1286 Do?

The Rosenthal Act, codified in Civil Code §§ 1788–1788.33, governs debt collection practices and establishes penalties for violations. SB 1286 amends the act to cover "specified commercial debt," which includes obligations incurred by small businesses for goods, services, or credit primarily used for business purposes.

This change means that debt collectors must now adhere to the same stringent rules when pursuing commercial debt as they do for consumer debt. Prohibited practices include harassment, threats, misrepresentation of the debt, and attempts to collect debts that are not legally enforceable. Small business owners, particularly those struggling in a volatile economy, now have recourse against unscrupulous collectors.

Who Does the Law Apply To?

SB 1286 primarily benefits small business owners who may lack the resources to defend themselves against aggressive or predatory debt collection tactics. It applies to debt collectors, collection agencies, and even original creditors engaging in collection efforts for commercial debts falling under the expanded definition.

The bill does not extend to large businesses or commercial debt involving entities with significant financial resources. Instead, the focus remains on small enterprises—those that often find themselves most vulnerable to economic pressures and ineq
uitable collection practices.

Why Was SB 1286 Necessary?

Governor Gavin Newsom, in signing the bill, emphasized the importance of protecting small businesses, which are the backbone of California’s economy. The COVID-19 pandemic and subsequent economic uncertainties exposed many small businesses to financial hardships, leaving them at the mercy of aggressive debt collection practices. Advocates for SB 1286 argued that extending RFDCPA protections was a matter of economic equity, ensuring that small business owners receive the same rights as individual consumers.

The bill’s proponents also pointed out that abusive debt collection practices can lead to unnecessary bankruptcies, closures, and financial ruin for entrepreneurs. Providing a fair legal framework was deemed essential to fostering a business environment where small enterprises can thrive.

 

Opposition to SB 1286

Despite its passage, SB 1286 faced significant opposition from creditor groups and business associations. Critics argued that the expanded protections could increase the cost of credit for small businesses, as lenders might pass on the cost of compliance to borrowers. They also expressed concern that the bill could lead to frivolous lawsuits, further burdening an already overextended judicial system.

However, supporters of the bill countered that fair practices benefit both lenders and borrowers by promoting transparency and accountability in the marketplace. They contended that the economic impact on creditors would be minimal compared to the societal benefits of protecting vulnerable businesses.

While SB 1286 primarily focuses on extending protections to specified commercial debt, its roots in the Rosenthal Fair Debt Collection Practices Act (RFDCPA) mean that the law continues to apply robust safeguards to consumer debt as well. For consumers, the RFDCPA prohibits practices like harassment, false statements, and attempts to collect debts not legally owed, providing a critical layer of protection against abusive debt collection practices. By expanding the scope of the RFDCPA to include small business debt, SB 1286 underscores the broader principle that fairness and transparency should govern all debt collection efforts, whether they target individual consumers or small business owners. This alignment may also indirectly benefit consumers by establishing more consistent standards and practices within the debt collection industry as a whole.

SB 1286 underscores the necessity for businesses and consumers to retain an attorney experienced in debt collection, and it represents a landmark step in California’s ongoing efforts to ensure fair treatment in financial transactions. By expanding the RFDCPA’s protections to specified commercial debt, the state aims to level the playing field for small business owners while addressing systemic inequities in debt collection practices. While the law’s long-term impact remains to be seen, it underscores California’s commitment to balancing economic growth with consumer and small business protections.

 

By: Desiree T. Washington, Esq. at Washington Law Firm