Does the deposit have to be in an interest-bearing account in California?

No statute addresses whether the account must bear interest.

What happens if a landlord does not pay deposit interest in California?

No statutory penalty reaches an interest violation specifically.

Do any cities or counties in California have their own deposit-interest rules?

California's answer is a state-level answer only, and a tenant in a rent-regulated city needs the local rule instead. Seven local regimes carry a live duty.

Does a landlord have to pay interest on a security deposit in California?

Verified August 28, 2026 All California topics →

Check your municipality. California does not preempt local rent regulation — city or county ordinances may impose rent caps, notice periods, and fee limits that are stricter than the state law on this page. Verify your municipality's ordinances before relying on any figure below. Verified local pages: Berkeley, Beverly Hills, Culver City, Hayward, Inglewood, Los Angeles, Los Angeles County (unincorporated), Mountain View, Oakland, Pasadena, Pomona, Richmond, Sacramento, San Francisco, San Jose, Santa Ana, Santa Monica, West Hollywood.

What the state record says

California has a statewide rent cap. The Tenant Protection Act (AB 1482) limits annual increases on covered units to the lesser of 5% plus regional CPI or 10%, with at most two increases per 12 months. Many units are exempt, and stricter local rent-control ordinances control where they exist. The cap is codified at Civ. Code § 1947.12. It is measured against the lowest rent in the prior 12 months and is in effect through 2030. Exempt: housing with a certificate of occupancy within 15 years (a rolling window); most single-family homes and condos not owned by corporations or REITs, where the exemption requires the statutory written disclosure to the tenant; and owner-occupied duplexes.

California's security-deposit statute says nothing about interest — no part of Civil Code § 1950.5 requires a landlord to pay or credit a tenant any interest on a residential deposit.

Cited to Cal. Civ. Code § 1950.5 (security deposits; the section is silent on interest) subdivisions (a)-(r); (d) for the creditor-priority rule and 2 more cited sources · Verified August 28, 2026

The section is otherwise a thorough deposit code, running from subdivision (a) to subdivision (r): it caps the deposit, governs pre-move-out inspections and photographs, sets the 21-day itemization deadline, and provides damages for a bad-faith retention. It simply never legislates what the money earns, and it never says a tenant is owed nothing either, so the answer rests on the statute's silence rather than on words denying interest. The word 'interest' does appear in § 1950.5 twenty-six times, and every one means a stake in the property — a 'successor in interest,' or the 'termination of the landlord's interest in the premises.' The statute imposes no escrow, trust, or separate-account duty either: its only holding rule, subdivision (d), says the security 'shall be held by the landlord for the tenant' and that the tenant's claim comes ahead of the landlord's creditors, which is a priority rule in insolvency rather than a custody requirement. What sets California apart from other silent states is that the silence leaves room for cities, and several have filled it: San Francisco, Los Angeles, Berkeley, West Hollywood, Watsonville, and unincorporated Santa Cruz County all require deposit interest by ordinance, each on its own rate — and East Palo Alto requires it for mobile home park space tenancies only. Mobilehome park spaces are the one corner of California law where the question is answered in words, and the answer is no — Civil Code § 798.39(f) says park management 'shall not be required to place any security deposit collected in an interest-bearing account or to provide a homeowner with any interest on the security deposit collected.'

California deposit interest at a glance

Interest owed to the tenant	No — no statute addresses it
How the rate is set	No rate exists — there is no interest duty
Current figure	No published figure exists
Rate rules	No rate rules — no duty exists
Accrual and payment	No payment duty exists
Who and what is covered	No statutory conditions stated — see the summary and notes
Statute controls where or how the deposit is held	No statute addresses how the deposit is held
Interest-bearing account required	No statute addresses whether the account must bear interest
Custody rules	No statute addresses custody of the deposit
Penalty for violation	No statutory penalty reaches an interest violation specifically
Local rules	California's answer is a state-level answer only, and a tenant in a rent-regulated city needs the local rule instead. Seven local regimes carry a live duty. San Francisco (Administrative Code ch. 49) owes interest on any deposit held a year or more, at a rate the Rent Board announces each year from a federal commercial-paper average. Los Angeles (Municipal Code § 151.06.02) lets the landlord pay either the rate the Rent Adjustment Commission adopts each year — published by the Housing Department in its Bulletin #44 — or the account's actual earnings shown by bank statements. Berkeley (Municipal Code § 13.76.070 with Regulations 701 through 706) fixes the rate by regulation and publishes a city calculator for it. West Hollywood (Municipal Code § 17.32.020) sets the rate from a survey of five online, federally insured banks under Regulation 42000, due each year by September 1. Watsonville (Municipal Code ch. 5-40) is conditional: the Council sets a rate annually, but whenever the figure falls below one-half of one percent the ordinance makes payment optional for the landlord — which it has been every published year since 2011. Unincorporated Santa Cruz County (County Code § 8.42.010) runs its own annual rate. East Palo Alto splits: its general rental stock carries no duty, while mobilehome park space deposits earn the account's actual earnings each December under the city's 1988 ordinance and implementing regulations. Two cities often listed alongside them no longer belong there — Santa Monica's Rent Control Board suspended the interest parts of Regulation 14001 effective June 22, 2002, and Hayward repealed its ordinance in 2019 and now leaves the question to state law. And two California cities are named in circulating claims that are simply false: neither San Jose nor Richmond requires deposit interest, and each is answered in its own record.

Cite this page: "Landlord Atlas, California Security Deposit Interest Laws (verified August 28, 2026), landlordatlas.com/laws/deposit-interest/california/" — free to cite and quote with a link (how these records are verified). Everything above is cited in the citations section below.

Check the verified California answer — and every state and city that differs — in the deposit interest calculator — free, no signup, built on the same verified California law as this page.

City and county deposit-interest pages in California

Berkeley — its own local interest rule
East Palo Alto — its own local interest rule
Hayward — a repealed or voided former rule, still widely misquoted
Los Angeles — its own local interest rule
Richmond — a verified answer to a circulating local-interest claim
San Francisco — its own local interest rule
San Jose — a verified answer to a circulating local-interest claim
Santa Cruz County — its own local interest rule
Santa Monica — a verified answer to a circulating local-interest claim
Watsonville — its own local interest rule
West Hollywood — its own local interest rule

Notes and caveats

Both of the usual California headlines are wrong — Charts that put California in the interest-paying column are wrong about the statute, and charts that flatly say 'no interest in California' are wrong for a large share of the state's renters. The accurate statement has two halves: Civil Code § 1950.5 requires nothing, and a handful of cities require a great deal.
Subdivision (d) is a priority rule, not a trust account — The whole of § 1950.5's holding rule is two sentences: 'Any security shall be held by the landlord for the tenant who is party to the lease or agreement. The claim of a tenant to the security shall be prior to the claim of any creditor of the landlord.' It names no account, no depository, and no institution. The one banking phrase elsewhere in the section, in subdivision (h)(1)(A)(ii)(I), is about returning the money electronically to an account the tenant designates — a delivery channel, not a place of custody.
Mobilehome parks answer the question in words — Civil Code § 798.39(f), part of the Mobilehome Residency Law rather than § 1950.5, is the only place California state law states the answer rather than leaving it open: park management need not place a deposit in an interest-bearing account and need not pay a homeowner interest on it. A park space and an apartment therefore reach the same result by two different routes, which matters when a reader wants something quotable.
The 2026 text is the operative one, and it added nothing on interest — The version of § 1950.5 in force was amended by Stats. 2025, ch. 340, § 1 (AB 414), effective January 1, 2026. The amendment left the section with no interest provision, as every earlier version did.

Common questions: California deposit interest

Each answer is the verified value from the table above, restated as a direct answer. Free to quote with a link to this page.

What is the California security deposit interest rate right now?: No published figure exists.
When must a landlord pay or credit deposit interest in California?: No payment duty exists.
Does the deposit have to be in an interest-bearing account in California?: No statute addresses whether the account must bear interest.
What happens if a landlord does not pay deposit interest in California?: No statutory penalty reaches an interest violation specifically.
Do any cities or counties in California have their own deposit-interest rules?: California's answer is a state-level answer only, and a tenant in a rent-regulated city needs the local rule instead. Seven local regimes carry a live duty.

Citations

Cal. Civ. Code § 1950.5 (security deposits; the section is silent on interest) · subdivisions (a)-(r); (d) for the creditor-priority rule (verified 2026) Official source
Cal. Civ. Code § 798.39 (Mobilehome Residency Law; the express park rule) · (f) (verified 2026) Official source
Assembly Bill 414 (2025-2026), chaptered October 6, 2025 — Stats. 2025, ch. 340, the amendment that produced the operative text of § 1950.5 (verified 2026) Official source

How this record was verified: Direct read of California Civil Code § 1950.5 in the Legislative Counsel's official published text — all eighteen subdivisions, (a) through (r), read in full, with each of the twenty-six occurrences of the word 'interest' examined in context and the section searched for every escrow, trust-account, separate-account, segregation and interest-bearing term. The operative version was established twice over: from the section's own credit line (Stats. 2025, ch. 340, § 1 (AB 414), effective January 1, 2026) and from the Legislature's own status record for AB 414, chaptered October 6, 2025. Civil Code § 798.39 of the Mobilehome Residency Law, subdivisions (a) through (g), read in full for the separate park rule.