San Jose, California: security deposit interest

The city's Apartment Rent Ordinance caps annual rent increases at five percent on covered units and bars a landlord from raising the security deposit during a tenancy, and those two real rules appear to have been fused by aggregator sites into a deposit-interest requirement that does not exist. The ordinance's only deposit provisions are the definition, the mid-tenancy increase bar, a narrow petition-based exception for new housing services, and refund duties that track state law. Deposits in San Jose are governed by California Civil Code § 1950.5, which itself requires no interest.

San Jose deposit interest at a glance

How this interacts with state law

California's security-deposit statute, Civil Code § 1950.5, does not address interest, and no state law stops a city from adding an interest requirement — several California cities have. San Jose simply has not: its Apartment Rent Ordinance regulates rent increases, evictions, and buyouts on covered units, and its only deposit rule is a bar on raising the deposit mid-tenancy.

Mobile home parks

San Jose's Mobilehome Rent Ordinance (chapter 17.22) likewise contains no deposit-interest duty for mobilehome park space tenancies. The state Mobilehome Residency Law, Civil Code § 798.39(f), expressly says a park management need not place a homeowner's deposit in an interest-bearing account or pay interest on it.

Notes and caveats

• Where the five percent claim comes from — San Jose's rent ordinance really does contain a five percent figure — the annual rent-increase cap on covered apartments (§ 17.23.310.B) — and really does regulate deposits, by freezing them for the length of the tenancy (§ 17.23.315.E, with a one-time petition exception in § 17.23.320.C). Landlord-advice sites and automated summaries have combined the two into 'San Jose requires 5% interest on deposits.' Every ingredient of that sentence exists in the code; the sentence itself is false.
• What the ordinance actually says about deposit interest — Chapter 17.23 mentions interest on deposits in exactly two places, and neither creates a duty. The fair-return accounting rules count 'interest from security and cleaning deposits (except to the extent paid to Tenants)' as landlord income when a landlord petitions for a larger rent increase (§ 17.23.820.A.3), and the Ellis Act withdrawal rules require refunding the deposit 'with any interest due' (§ 17.23.1150.A.3) — wording that refers to whatever interest is owed under other law or the lease, without setting a rate, a schedule, or a source for one.
• The real local deposit rule — On a rent-stabilized San Jose apartment, the security deposit is frozen once set: it cannot be raised for the duration of the tenancy, for as long as any original tenant remains, unless landlord and tenant jointly petition for a one-time increase tied to new or additional housing services. That freeze is a genuine local protection that goes beyond state law — it is just not an interest rule.

Cite this page: "Landlord Atlas, San Jose, California: security deposit interest (verified August 28, 2026), landlordatlas.com/laws/deposit-interest/california/san-jose/" — free to cite and quote with a link (how these records are verified).

Citations

• San Jose Muni. Code ch. 17.23 (Apartment Rent Ordinance) (verified 2026) Official source
• San Jose Muni. Code § 17.23.315 (rent increase limits; the deposit-increase bar) · subsec. (E) (verified 2026) Official source
• San Jose Muni. Code ch. 17.22 (Mobilehome Rent Ordinance) (verified 2026) Official source

How this record was verified: Complete read of San Jose Municipal Code chapter 17.23 (Apartment Rent Ordinance, all twelve parts) and chapter 17.22 (Mobilehome Rent Ordinance) as codified through Ordinance No. 31330 (enacted June 16, 2026), with every occurrence of the words 'interest' and 'deposit' in both chapters examined in context and enumerated, plus the table of contents of all 28 titles of the code checked for any other landlord-tenant provision, and the city Housing Department's rent-stabilization explainer page read on the city site.

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.