My Property Management FAQ's > Security Deposits > Am I required to pay interest on a resident's security deposit?
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It depends on where in California your property is located. There is no state law that requires a property owner to pay interest on the security deposit they hold. However, some local jurisdictions such as San Francisco, do required an owner to pay interest.
In San Francisco, an owner must pay interest on a security deposit after it has been held for one year. For many years the interest rate was set at 5% year year. Now the interest rate changes each year. The year is NOT a calendar year but changes each year at the same time the allowable lawful annual increase rate changes.
Please see our section on Security Deposit Interest for more details.
Last updated on October 6, 2008 by MRU Managing Editor