Los Angeles, California: security deposit interest

The landlord may pay the rate the Rent Adjustment Commission adopts each year — 3.03% for 2026 — or the interest the deposit actually earned, in which case the landlord has to give the tenant bank statements showing those earnings; a landlord who claims actual earnings without producing the statements owes the Commission's rate instead (§ 151.06.02(B)(1)). Interest runs from November 1, 1990 on a monthly basis and is paid during the tenancy, monthly or yearly at the landlord's election, either directly or as a credit against rent, with written notice to the tenant of which method the landlord has chosen (§ 151.06.02(C)). At the end of a tenancy, a tenant whose deposit was held a year or more is paid the accumulated interest on the same timetable as the deposit itself under Civil Code § 1950.5(f). The city does not enforce any of this: the tenant's remedy is a civil action, including in small claims court (§ 151.06.02(G)). Mobile home parks are outside the section altogether (§ 151.06.02(H)).

Los Angeles deposit interest at a glance

The rate

Since January 1, 2003 the landlord picks between two methods (§ 151.06.02(B)(1)). The first is the annual rate adopted by the Rent Adjustment Commission, based on the average of the interest rates on savings accounts paid on September 1 of the previous year by at least five FDIC-insured banks with branches in Los Angeles; the Commission adopts the rate by November 30 each year and publishes it in a newspaper of general circulation within a week, and the figure governs January 1 through December 31 of the following year. The second is the interest each deposit actually earned that year — but a landlord using it must give the tenant bank statements showing the earnings when the interest is paid, and a landlord who does not produce them owes the Commission's rate instead. Three fixed periods come before the Commission-set series: 5% simple interest a year from November 1, 1990 through December 31, 2000 (§ 151.06.02(B)(3)), 2% simple interest for calendar 2001 (§ 151.06.02(B)(2)), and no accrual at all for calendar 2002 (§ 151.06.02(B)(1)(c)). The Housing Department names the established rate in the annual rental unit registration billings and publishes it in a newspaper of general circulation (§ 151.06.02(B)(4)).

Accrual and payment

Interest began accruing on November 1, 1990 and accrues on a monthly basis (§ 151.06.02(C)). It is paid during the tenancy rather than held to the end: the landlord may pay it monthly or yearly, either as a direct payment or as a credit against rent, and must notify the tenant in writing which of the two methods the landlord has chosen. On termination, only a tenant whose deposit was held for a year or more is entitled to the unpaid accumulated interest, and it is paid at the same time and in the same manner as the deposit itself under Civil Code § 1950.5(f) (§ 151.06.02(D)). When a landlord's interest in the property ends, accumulated interest is handled the same way the deposit is under Civil Code § 1950.5(g) and (h) (§ 151.06.02(E)).

Who and what is covered

The ordinance's own words reach further than the city's administrative practice, and the two have not been reconciled. Subsection (B) puts the duty on "[a] landlord who is subject to the provisions of Section 1950.5 of the California Civil Code" holding a deposit for at least one year — wording that on its face covers residential landlords across the city, and wording the Council adopted deliberately when Ordinance No. 174,017 amended the subsection in 2001. The section nevertheless sits inside Chapter XV, the Rent Stabilization Ordinance, and the Los Angeles Housing Department administers it as a duty of landlords of rent-stabilized units, describing it in its own bulletin as falling on landlords of units subject to the Rent Stabilization Ordinance with a certificate of occupancy first issued before October 1, 1978. Both statements stand as they are: the ordinance text is broader than the administrative gloss, and a landlord of a non-stabilized Los Angeles unit sits squarely inside the ordinance's words. Whichever reading applies, mobile home parks are outside the section under subsection (H), and no interest is owed on a deposit held less than a year.

Custody of the deposit

The section imposes no account duty. Nothing in § 151.06.02 requires escrow, a trust account, a separate account or an interest-bearing account, and subsection (F) expressly preserves the landlord's discretion in investing security deposits. The actual-earnings method in subsection (B)(1)(b) is an option the landlord may elect, not a requirement that the deposit be held somewhere that earns anything — a landlord who keeps the money in a non-earning account simply owes the Commission's rate.

Penalty for violation

No fine, no multiple damages and no city enforcement. Subsection (G) gives the tenant an action to recover the amount owed in a court of appropriate jurisdiction, including small claims court, and that is the whole of the remedy. The Housing Department's bulletin states that its Rent Stabilization Division will not investigate complaints about non-payment of interest on security deposits, because § 151.06.02(G) provides only a civil remedy in court.

How this interacts with state law

California's deposit statute, Civil Code § 1950.5, says nothing about interest, so the Los Angeles duty is purely local. The ordinance still borrows the state statute at four points: § 1950.5 supplies the definition of the deposit (subsection A) and the test for which landlords are covered (subsection B), the timing and manner of the end-of-tenancy payment follow § 1950.5(f) (subsection D), and accumulated interest follows the deposit under § 1950.5(g) and (h) when the property changes hands (subsection E).

Mobile home parks

Subsection (H) states that § 151.06.02 does not govern mobile home parks, and the Housing Department says the same — the Rent Stabilization Ordinance requires no interest on mobile home park deposits. State law for those tenancies runs the other way: Civil Code § 798.39(f), part of the Mobilehome Residency Law, expressly says park management need not put a homeowner's deposit in an interest-bearing account or pay interest on it.

Published rate tables

Los Angeles security deposit interest rates, 1990 to 2026

The Housing Department's published chronology, together with the three periods the ordinance fixes itself. Each figure is an annual simple rate covering a calendar year, except the first band, which the ordinance ties to the November 1, 1990 accrual start. These are the rates a landlord owes when using the Rent Adjustment Commission's rate; a landlord who instead pays the interest the deposit actually earned, with bank statements to show it, pays that amount rather than the figure below.

A current series — the Rent Adjustment Commission, which adopts the following year's rate by November 30 each year; the Housing Department then publishes it in a newspaper of general circulation and in the annual registration billings. Source: official source · verified August 28, 2026.

Work out a figure: the deposit interest calculator computes Los Angeles interest from this table using the locality's own published method.

Notes and caveats

• The text and the city's practice do not agree on who is covered — This is the live question about the Los Angeles rule, and it is left open here rather than settled. The ordinance imposes the duty on a landlord "subject to the provisions of Section 1950.5 of the California Civil Code" — the state deposit statute, which covers residential landlords generally — while the Housing Department's own bulletin describes the requirement as one for landlords of rent-stabilized units with a certificate of occupancy first issued before October 1, 1978. The section does sit inside the Rent Stabilization Ordinance, which is the argument for the narrower reading; the subsection's own words are the argument for the broader one, and the Council put them there deliberately in 2001. Nearly every secondary account states the narrow version without mentioning that the ordinance says something wider.
• Interest is paid during the tenancy, not at move-out — The common assumption is that deposit interest is settled when the tenant leaves. In Los Angeles it is not: subsection (C) requires the landlord to pay the accrued interest monthly or yearly while the tenancy runs, by direct payment or rent credit, and to tell the tenant in writing which method is being used. The end-of-tenancy payment under subsection (D) covers what is left unpaid, not the whole of it.
• The city's own bulletin misdates two ordinances — The Housing Department's bulletin gives Ordinance No. 174,017 as effective June 7, 2001, while the code's amendment line for subsection (B) says July 16, 2001; and it gives Ordinance No. 175,020 as effective January 1, 2004, while the code says February 1, 2003, with the two-method election operating from January 1, 2003. The bulletin repeats the second error when it says the two payment methods have been available since 2004. The code's dates are the ones to work from.
• Calendar 2002 earned nothing — Subsection (B)(1)(c) provides that no interest accrues on security deposits for January 1 through December 31, 2002. That is a Council decision, made by Ordinance No. 175,020, not a gap in the record — a deposit held through 2002 simply earns nothing for that year, and the years on either side are unaffected.
• The 5% era starts in November 1990 — The Housing Department's chronology prints its first row as running from January 1, 1990, but the ordinance fixes 5% for deposits held from November 1, 1990 through December 31, 2000 and sets accrual to begin on November 1, 1990. Nothing is owed for the first ten months of 1990.
• Choosing actual earnings comes with a condition — A landlord who pays the interest the deposit actually earned has to hand the tenant bank statements showing the earnings for that year, at the time the interest is paid. If the statements do not come with the payment, the rate the landlord owes is the one the Rent Adjustment Commission set — so the actual-earnings route is only cheaper for a landlord who can document it.

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

Citations

• L.A. Mun. Code § 151.06.02 (payment of interest on security deposits) · A, B, C, D, E, F, G, H (verified 2026) Official source
• Los Angeles Housing Department, Rent Stabilization Bulletin #44 (Interest Payment on Security Deposit), edition of January 13, 2026 (verified 2026) Official source

How this record was verified: Direct read of Los Angeles Municipal Code § 151.06.02 (Payment of Interest on Security Deposits), subsections A through H, in the current edition published by the city's official code publisher, including every amendment line the section carries; and of the Los Angeles Housing Department's Rent Stabilization Bulletin #44, edition of January 13, 2026, read in full for the department's official chronology of rates from 1990 through 2026, the current figure, the department's statement of who the duty covers, its account of the ordinance history and its statement of how the duty is enforced. The effective dates in the code's own amendment lines were compared with the dates the bulletin gives, and the two disagree for Ordinance No. 174,017 and Ordinance No. 175,020.

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.