New Interest Rate for Security Deposits Effective 3/1/24
The rate of interest owed on deposits for the period March 1, 2024 through February 28, 2025 is 5.2%.
The rate of interest owed on deposits for the period March 1, 2023 through February 29, 2024 is 2.3%.
Security deposits can sometimes be described as “move-in fees,” “pet deposits,” or “cleaning fees.” Regardless of what they are called, Chapter 49 of the San Francisco Administrative Code requires landlords to pay interest annually on deposits held over one year.
Interest payments apply to all residential rental units in San Francisco, including those exempt from the Rent Ordinance, with one exception: where the rent for the unit is assisted or subsidized by a government agency, the interest payment requirement does not apply.
Interest must be paid every year on the tenant’s “annual due date.” For tenancies beginning after September 1, 1983, the annual due date is the same day and month the landlord received the deposit from the tenant. (If the tenant moved in and paid a deposit before September 1, 1983, interest was due on September 1, 1984 and every September 1st thereafter.) A list of interest rates by year since 1983 is available here.
If the tenant vacates before one full year of occupancy, no interest is due. Where a tenant vacates after one year of occupancy but before the next annual due date, the interest payment for the partial year period must be pro-rated and calculated using the interest rate in effect on the date the tenant vacates.
This Year’s Security Deposit Interest Rate
The rate of interest owed on deposits for the period March 1, 2024 through February 28, 2025 is 5.2%. The rate of interest owed on deposits for the period March 1, 2023 through February 29, 2024 is 2.3%. The new rate is published annually by the Rent Board in early January for the one-year period beginning March 1st.
The Rent Board calculates the interest rate according to the annual average of the 90-Day AA Financial Commercial Paper Interest Rate (rounded to the nearest tenth) for the immediately preceding calendar year as published by the Federal Reserve.
Landlords Pay Security Deposit Interest
The landlord has the option of paying the security deposit interest to the tenant in the form of either a direct payment or a credit against the tenant’s rent. If a unit is covered by the Rent Ordinance and subject to the annual Rent Board fee, the landlord is allowed to deduct 50% of the annual Rent Board fee from the security deposit interest payment due to the tenant each year.
Security Deposit interest must be paid within two weeks of the date the tenant vacates. However, a landlord may retain a portion of the unpaid accrued interest where the amount of the security deposit alone does not cover allowed deductions.
Generally, disputes concerning security deposits or security deposit interest issues are decided in Small Claims Court. The Rent Board does not have jurisdiction over these disputes. Rent Board staff cannot give legal advice concerning these issues. Please consult an attorney or appropriate agency for specific advice.
Deductions
State law requires the landlord to refund deposits within 21 days of the tenant vacating the unit. State law allows the landlord to make deductions from a security deposit for reasons such as:
- Unpaid rent or bills
- “Reasonable” cleaning
- Loss of personal property
- Damage to the unit that exceeds normal wear and tear
- Damage to the unit caused by guests that exceed normal wear and tear
Normal wear and tear is not clearly defined under state law. The Rent Board cannot help you determine what is or is not normal wear and tear.
The landlord may be liable for penalties of up to twice the amount of the deposit, in addition to actual damages, for bad faith retention of a security deposit.
If you are having issues with your security deposit, please visit our counseling clinic to speak to an SFTU counselor!
