Bill on security-deposit interest advances


A bill that would require landlords to pay interest on security deposits advanced Tuesday from the Senate Judiciary Committee and is headed for the Senate floor for a vote as early as next week.

The legislation, SB 603 by Mark Leno, D-San Francisco, does not make financial sense for tenants or landlords.

Under SB 603, a tenant would receive less money in interest than the costs incurred by his or her landlord to account for and return the security deposit.

Sen. Mark Leno

Sen. Mark Leno

Along with the requirement for interest payments, the bill includes a second troubling proposal: With no consideration for the owner’s rationale, a small claims court judge must award penalties against the owner if the tenant successfully demonstrates that all or a portion of the deposit should have been returned. Under current law, a judge only awards penalties if he or she concludes that the owner withheld the deposit in “bad faith.” The bad faith requirement would go away under SB 603.

With the change to the penalty provisions of the law, more tenants would surely challenge their deposit return. Any degree of victory would mean getting all of a security deposit back, plus penalties and actual damages.


  • Is leno out of his mind ? My deposits will certainly be affected. Most likely o the detriment of the tenants.

  • This bill would be terrible. I own buildings in SF under rent control. Paying interest and keeping track of it is more costly than the interest paid. SF also has rules for charging back Rent Board fees to tenants, procedures for Utility pass-throughs, City inspection fees, and other permissible ways to nickle and dime tenants to death. All are complicated and costly to administer.

  • This makes no logical sense. What an idiot this guy is for imposing this on landlords who have enough to be responsible for and now interest?. Landlords are not financial institutions!! Don’t regulate our lives!!!!

  • Leno is an idiot. The cost to administer far exceeds the value. Oh…wait a minute, actually he is practicing typical government…he is a genius!

  • Tell Leno this does not make sense. On a $1000 Security Deposit, SF required interest % over 10 years totals $234. Rent Board fees permissible to charge back to the tenant over the same period totals $359. The tenant is better off to have no interest on Security Deposits if the landlord does not charge back Rent Board fees to the tenant. The administrative expense to the landlord of administering this is more than the sum of the two added together. Tell them to vote NO on this bill.