Q.What interest rate am I entitled to on my Security Deposit? (CA)
A.In California there are 15 rent-controlled cities that reqire landlords to pay interest on the security deposits they collect from their tenants. Only three of these rent-controlled cities specify the interest rate to be paid; they are Los Angeles (5%), San Francisco (5%), and Santa Monica (3%).
Landlords in Santa Monica objected and filed an action in court arguing that they should not be required to pay an interest rate that was higher than the interest rate paid by banks. Action Apartment Ass'n v. Santa Monica Rent Control Bd. 94 Cal.App.4th 587 (2002). The Court of Appeal agreed and ruled that when interest on deposits is required by a local ordinance, the landlord need pay an interest rate equal to the rate paid by banks.
Landlords in Los Angeles, San Francisco, and Santa Monica can now recalculate the amount of interest owed on security deposits as of the date the decision became final, February 3, 2002.