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Los Angeles Tenants in Rent-Controlled Units - Reminder

Written By: Melissa C. Marsh, Esq., California Business Attorney, November 2012 Add to Favorites
California State Law regulates the collection and refund of security deposits (California Civil Code §1950.5). Rental agreements may refer to these deposits as "cleaning deposit," "last month's rent" or "security deposit". No matter what the landlord calls it, the law considers any deposit to be a security deposit and limits the amount the owner may charge and what it may be used for when the tenant moves out.

In California the maximum security deposit a landlord is allowed to collect is two months’s rent for an unfurnished unit, and three months rent for a furnished unit.

In Los Angeles, the Rent Stabilization Ordinance permits the landlord to increase the security deposit on an existing tenant in the same percentage increase allowed that year for a rental increase (presently 3%). The City of Santa Monica does not permit such an increase.

In the City of Los Angeles, unlike the City of Santa Monica, a tenant in a rent controlled unit is also entitled to interest on their security deposit. This interest is required to paid by the landlord to the tenant annually.

For rent controlled units in the City of Los Angeles, the Interest Rate That Must Be Paid is as follows:

Years Annual Interest Rate
2009 1.76%
2010 .55%
2011 .29%
2012 .22%

The City of West Hollywood and San Francisco also require the payment of interest on a tenant's security deposit.

In the City of West Hollywood, the Rent Stabilization Ordinance requires landlords to pay interest on a tenant security deposit by January 31st of each year in an amount determined by the City based on prevailing interest rates. For depsoits held for calendar year of 2011, interest of 0.25% was owed in January of 2012. Tenants who did not or do not receive interest on their security deposit from the landlord, may deduct the unpaid interest amount owed to them (up to the last three years) from their rent as of February 1st of each year.

In the City of San Francisco, all landlords are required to pay interest on a tenant's security deposit if held more than one year on its "annual due date." the interest rate for security depsoits held from March 1, 2012 through February 28, 2013 is 0.4%. See Chapter 49 of the San Francisco Administrative Code. If a landlord holds a tenant's security deposit for less than one full year, no interest is due. However, if a landlord holds a security deposit for say one and a half years, the landlord must pay the interest for the full year and the pro-rated amount owed for the second year using the interest rate in effect on the date the tenant vacates.


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Disclaimer: The information presented on this web site was prepared by Melissa C. Marsh for general informational purposes only and does not constitute legal advice. The information provided in my articles and alerts should not be relied upon, or used as a substitute for professional legal advice from an attorney you retain to advise or represent you. Your use of this Internet site does not create an attorney- client relationship. Transmission of this article is not intended to create, and receipt of it does not constitute, an attorney-client relationship. All uses of the contents of this site, other than personal uses, are prohibited. You may print or email a copy of any information posted on this web site for your own personal, non-commercial, use, but you may not publish any of the articles or posts on this web site without the Express Written Permission of Melissa C. Marsh.


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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.