California Security Deposit Interest Calculator & Escrow Rules
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Under Cal. Civ. Code § 1950.5, landlords in California are not statutorily required to pay interest on security deposits unless expressly promised in the written lease.
California Deposit Interest Laws at a Glance (Cal. Civ. Code § 1950.5)
State law does not mandate interest payments; deposit is returned without interest unless specified in lease.
| Statutory Interest Mandate | Not required by state statute (lease controls) |
|---|---|
| Statutory Interest Rate | 0.00% (No statutory requirement) |
| Minimum Tenancy Duration | No minimum tenancy required |
| Escrow Account & Banking Rule | Trust account or financial escrow rules apply, but interest accrued belongs to the landlord unless lease states otherwise. |
| Governing Statute | Cal. Civ. Code § 1950.5 ↗ |
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Key California Statutory Nuances & Escrow Case Law
- No Statutory Interest Mandate: Under Cal. Civ. Code § 1950.5, residential landlords in California are not required to pay interest on security deposits.
- Lease Terms Control: A landlord is only obligated to pay interest if a specific clause in the signed rental agreement expressly promises it.
- Escrow Account Distinction: While state law may regulate where deposit funds are held to prevent commingling, accrued interest is not transferred to the tenant.
California Standard Tenancy Deposit Review
$2,000
24 months
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Under Cal. Civ. Code § 1950.5, landlords in California are not statutorily required to pay interest on tenant security deposits. On a $2,000 deposit held for 24 months, the statutory interest owed is $0.00 unless the written lease specifically provides otherwise.
California Security Deposit Interest FAQs
Does California law require landlords to pay interest on security deposits?
No. Under Cal. Civ. Code § 1950.5, there is no state statutory requirement in California for residential landlords to pay interest on security deposits.
Can a tenant in California negotiate deposit interest in the lease?
Yes. While state law does not mandate it, landlords and tenants are free to include a contractual interest provision in their written lease agreement.
Does a landlord have to keep my deposit in a separate bank account in California?
State escrow laws regulate trust accounting and protect funds from commingling, but any interest generated belongs to the landlord under Cal. Civ. Code § 1950.5.
What happens if a California lease promises interest but the landlord fails to pay?
If interest is explicitly specified in a signed lease agreement, failure to pay constitutes a breach of contract enforceable in Small Claims Court.