East Palo Alto, California: security deposit interest

On the park side the duty is real and detailed: the deposit sits in an interest-bearing account at a federally insured institution, designated as held in trust for the tenants, and the actual interest earned is paid to the tenant every December as cash or a rent rebate, with the balance paid out on departure. A park tenant who has not been paid by January 31 may deduct ten percent of the deposit from one month's rent on thirty days' notice. For every other rental in the city the rent stabilization ordinance creates no interest duty — but it does give the Rent Stabilization Board express power to create one by regulation, and the Board has never used it, so this is an answer a single Board resolution could change.

East Palo Alto deposit interest at a glance

The rate

Where a duty exists — mobile home park space tenancies — it is an actual-earnings rule, so the city publishes no rate and there is no figure to look up. Regulation 702.A entitles the tenant to "the actual amount of interest earned" by the deposit, and the landlord's yearly statement must show the deposit amount, the rate the financial institution paid, the period it was earned over and the interest paid in dollars and cents. Bank management or trust fees charged on the account may be deducted from the interest payable, divided evenly across the affected units, with an accounting to the tenants on request (Regulation 701.A.1). Where the landlord never put the money in an insured account, Regulation 703 supplies a fallback: the tenant is owed the greater of the passbook rate such an institution would have paid, California's legal rate of interest, or the interest the landlord actually earned by whatever use they made of the money. For the city's ordinary rental stock there is no rate because there is no duty.

Accrual and payment

On the mobile home park side, interest is paid once each year, in December, either as a cash payment or as a rent rebate; where the landlord chooses the rebate, the December notice must tell the tenant to credit the January rent by that amount. The balance of the interest is paid with the principal when the tenant leaves. On written request the landlord must obtain and give the tenant the financial institution's own written confirmation of the account and the interest payable. Interest runs from April 27, 1984 or from the start of the tenancy, whichever is later. None of this reaches an ordinary East Palo Alto rental, where no interest is owed and nothing accrues.

Who and what is covered

East Palo Alto splits in two, and which half a tenancy falls into decides the answer. Ordinary residential tenancies are governed by the 2010 rent stabilization ordinance, chapter 14.04, which creates no interest duty: § 14.04.080.K says only that the Rent Stabilization Board "may establish rules and regulations for the payment of interest on tenants' security deposits," and the Board has not done so — its regulations contain one security-deposit rule and it freezes the deposit amount rather than paying interest. Mobile home park space tenancies are governed instead by the 1988 ordinance and its regulations, which do impose a duty; § 14.04.030 is the codified section that keeps them alive, providing that the 2010 chapter governs residential tenancies in the city "except for mobile home park space tenancies" and that the prior ordinance and its regulations continue to apply to those. Inside the mobile home park side one carve-out matters: a landlord who owns a maximum of four rental units in East Palo Alto is outside the 1988 ordinance except for its good-cause eviction section, and so outside the interest duty too.

Custody of the deposit

For a mobile home park space tenancy the deposit must be placed in an interest-bearing account at an institution whose accounts are federally insured, and the account must be clearly designated to show that the money is held in a fiduciary capacity for the benefit of the tenants (Ordinance No. 076 § 7; Regulation 701). The insurer named in the 1988 text is the Federal Savings and Loan Insurance Corporation or the Federal Deposit Insurance Corporation; the first of those was abolished in 1989 and the wording has never been updated, so it is quoted here as it stands. For every other rental in the city there is no local custody rule at all — Civil Code § 1950.5 governs, and it imposes none.

Penalty for violation

The mobile home park regulations give the tenant a self-help remedy rather than a damages claim. A tenant who has not received the interest, as a cash rebate or a rent credit, by January 31 may deduct ten percent of the security deposit from one month's rent by giving the landlord thirty days' notice, filing a copy of that notice with the Rent Stabilization Board within five days; a landlord who wants to contest it petitions the Board within ten days, and a tenant who would rather have cash than a rent reduction petitions the Board as well (Regulation 702.D). A landlord who never opened an insured account still owes the interest calculated under Regulation 703, and paying it does not relieve the landlord of any other penalty. For ordinary tenancies there is no interest duty and so no penalty attached to one.

How this interacts with state law

California's security-deposit statute, Civil Code § 1950.5, says nothing about interest, and no state law stops a city from requiring it. East Palo Alto's Rent Stabilization Board holds an express, unused power to create such a rule for the city's ordinary rental stock, so for most tenancies in the city the state statute's silence is the entire answer — for now. The state's Mobilehome Residency Law points the other way from the local rule on park spaces: Civil Code § 798.39(f) says park management need not place a homeowner's deposit in an interest-bearing account or pay interest on it, while East Palo Alto's surviving 1988 ordinance requires both. The two texts are recorded here as they read.

Mobile home parks

Mobile home park space tenancies are the half of East Palo Alto that has a real deposit-interest duty, and it is an unusually strong one. Under section 7 of the 1988 ordinance the landlord must place the deposit — including advance rent — in an interest-bearing account at a federally insured institution, designated as held in a fiduciary capacity for the tenants' benefit, and must return the interest earned to the tenant every year in December, as cash or as a rent rebate, with the balance paid alongside the principal when the tenant departs. What is owed is the actual interest the account earned, shown in a yearly statement giving the deposit amount, the institution's rate, the period and the dollars-and-cents figure, and confirmed by the institution itself on written request. A tenant not paid by January 31 may deduct ten percent of the deposit from one month's rent on thirty days' notice, filing a copy with the Rent Stabilization Board. Landlords who own four or fewer rental units in the city are outside the 1988 ordinance and this duty. The ordinance and its regulations sit outside the Municipal Code, published by the city as documents on its own site; the codified section that keeps them in force for park spaces is § 14.04.030.

Work out a figure: the deposit interest calculator covers East Palo Alto — no published rate table exists here, so it computes on the rate the account actually paid, per the local rule.

Notes and caveats

• Two regimes in one city — East Palo Alto's 2010 rent stabilization ordinance governs residential tenancies in the city "except for mobile home park space tenancies," and § 14.04.030 keeps the older 1988 ordinance and its regulations alive for those park spaces. That single sentence is why the city gives two different answers on deposit interest. Sources describing East Palo Alto as an interest-paying city are quoting the mobile home park rule and applying it to apartments, where it does not reach.
• A rule the Rent Stabilization Board could create at any time — Section 14.04.080.K says the Board "may establish rules and regulations for the payment of interest on tenants' security deposits." That is permission, not a duty — it sets no rate, no timing and no account rule, and the Board's current regulations, in force since April 2019, contain no interest provision. The power is live, though: a Board resolution alone could create an interest duty for the ordinary rental stock without any council or ballot action. Even then it would not reach the units that § 14.04.050.B partially exempts from § 14.04.080, which include the single-family and separately alienable units state law exempts, construction after January 1, 1988, owner-occupied two- and three-unit properties, and certain units held under nonprofit affordability covenants.
• The only deposit rule for ordinary rentals is a freeze — The Board's regulations do contain a security-deposit rule, and it caps rather than pays: any amount held as a security deposit within the meaning of Civil Code § 1950.5 — including advance rent and deposits for keys, garage, garage door openers, pets, security, cleaning and furnishings — may not be increased during the tenancy, with one exception for additional pet security taken with the tenant's written consent and only as far as state law allows.
• If a park landlord never opened an insured account — Regulation 703 covers the landlord who skipped the account requirement: the tenant is still owed interest, at the greater of the passbook rate the insured institution would have paid, California's legal rate of interest, or whatever the landlord actually earned on the money. The regulation adds that paying it does not relieve the landlord of any other penalty. It also still names the Federal Savings and Loan Insurance Corporation, an insurer abolished in 1989 — the text has never been updated and is quoted as written.
• Small landlords are outside the park rule — The 1988 ordinance applies to rental property in the city except units owned by landlords who own a maximum of four rental units in East Palo Alto, and for this purpose the landlord is the owner of record holding at least a fifty percent interest. Those units stay subject to the ordinance's good-cause eviction section but nothing else, so a small park owner owes no deposit interest under it.
• Where the park rules live — The 1988 ordinance and its mobile home park regulations are not part of the Municipal Code — the city publishes them as documents on its own website, and its posted copies carry a notice that they are provided for convenience rather than as the official record of the city's laws. The codified anchor is § 14.04.030, which independently confirms that the prior ordinance and its regulations remain in force for park space tenancies. The posted park regulations are dated July 27, 2016.
• State law points the other way for park spaces — California's Mobilehome Residency Law, Civil Code § 798.39(f), expressly says park management need not put a homeowner's deposit in an interest-bearing account or pay interest on it. East Palo Alto's surviving 1988 ordinance requires both. Both texts are set out here as they read; whether the local rule stands against the state provision is not something the sources answer.

Cite this page: "Landlord Atlas, East Palo Alto, California: security deposit interest (verified August 28, 2026), landlordatlas.com/laws/deposit-interest/california/east-palo-alto/" — free to cite and quote with a link (how these records are verified).

Citations

• East Palo Alto Muni. Code § 14.04.030 (prior ordinance repealed except for mobile home park space tenancies) (verified 2026) Official source
• East Palo Alto Muni. Code § 14.04.080 (unit registration and certification; the Board's power over deposit interest) · subsec. (K) (verified 2026) Official source
• City of East Palo Alto, Rent Stabilization Ordinance and Regulations (hosting Ordinance No. 076 of 1988 and the Rules and Regulations for Mobile Home Park Space Tenancies) (verified 2026) Official source

How this record was verified: Complete read of East Palo Alto Municipal Code chapter 14.04 (Residential Rent Stabilization and Just Cause for Eviction Ordinance), all 26 sections as codified through Ordinance No. 07-2025 adopted October 21, 2025, with every occurrence of 'interest' and every occurrence of 'deposit' in the chapter placed in context, and the whole code's table of contents and full-text index examined for any other provision touching security deposits or interest on them; the Rent Stabilization Board's regulations under the 2010 ordinance as amended April 10, 2019 read in full for any interest rule, with all nineteen occurrences of 'interest' in them enumerated; Ordinance No. 076 of April 1988, section 7, and the Rules and Regulations for Mobile Home Park Space Tenancies dated July 27, 2016, regulations 701 through 704, read in full from the city's own posted documents, together with the 1988 ordinance's applicability section and its table of contents annotations showing which sections the 2010 ordinance superseded; and ten of the city's rent stabilization program pages and the mobile home park forms page read for any published rate or deposit guidance.

This page records local law on deposit interest. The statewide position — 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. — lives on the California deposit-interest page with its own citations and verification date.