Los Angeles Security Deposit Rules: What the Rent Stabilization Ordinance deposit-interest rule Adds to California Law

A landlord in Los Angeles has to satisfy two sets of rules at once: the California statute, Cal. Civ. Code § 1950.5, and the city's own Rent Stabilization Ordinance deposit-interest rule (LAMC § 151.06.02). The state law sets the 21-day return deadline after the day the tenant moves out; the local ordinance adds a rule on interest on the deposit. Where the two overlap, the landlord has to meet the stricter one.

What the Rent Stabilization Ordinance deposit-interest rule adds

• Interest on the deposit: Landlords of RSO units must pay interest on all security deposits held for at least one year, either at the Rent Adjustment Commission rate or the actual bank interest earned (with statement). (LAMC sec. 151.06.02)
• Interest on the deposit: The Rent Adjustment Commission sets the annual rate; the 2026 rate is 3.03%. (LAHD bulletin (RAC rate))

Who it covers: Units covered by the Rent Stabilization Ordinance, i.e. rental units with a certificate of occupancy first issued before October 1, 1978 in the City of Los Angeles; mobile home parks are not required to pay interest.
Worth knowing: Interest applies only to RSO units (certificate of occupancy first issued before October 1, 1978); mobile home parks are excluded. A landlord may pay the actual bank interest earned instead of the Commission rate if it gives the tenant a statement. This summary comes from the Housing Department's official bulletin; the code text itself was not read for this page.

What California law already requires

• Return deadline: 21 days after the day the tenant moves out.
• Itemized deductions: required in writing. Itemized statement with copies of receipts or invoices for any repair or cleaning charge over $125; since 2025 landlords must photograph the unit at move-in and move-out to support deductions.
• Forwarding address: not a statutory condition of getting the deposit back.
• Penalty for wrongful withholding: For bad-faith retention the tenant may recover statutory damages of up to twice the deposit, on top of actual damages.
• Deposit cap: One month's rent (two months for qualifying small landlords) under AB 12, effective July 1, 2024.
• Small claims limit: $12,500.
• Statute: Cal. Civ. Code § 1950.5.

Using both rules together

1. Read the lease for the deposit amount, the move-in date, and any clause that mentions the ordinance.
2. Check the local rule first: interest on the deposit under LAMC § 151.06.02.
3. Count the California deadline of 21 days from the day the tenant moves out.
4. A written demand that cites both Cal. Civ. Code § 1950.5 and LAMC § 151.06.02 carries more weight than one that cites either alone. For bad-faith retention the tenant may recover statutory damages of up to twice the deposit, on top of actual damages.

Frequently Asked Questions

Q: Does Los Angeles require interest on security deposits?
A: Yes. Landlords of RSO units must pay interest on all security deposits held for at least one year, either at the Rent Adjustment Commission rate or the actual bank interest earned (with statement). The Rent Adjustment Commission sets the annual rate; the 2026 rate is 3.03%. The Rent Adjustment Commission rate for 2026 is 3.03%.

Q: Is the Los Angeles deposit return deadline different from California law?
A: No. The Rent Stabilization Ordinance deposit-interest rule does not change the return deadline, so the California rule applies: 21 days after the day the tenant moves out under Cal. Civ. Code § 1950.5.

Q: Does the Rent Stabilization Ordinance deposit-interest rule apply to my unit?
A: Units covered by the Rent Stabilization Ordinance, i.e. rental units with a certificate of occupancy first issued before October 1, 1978 in the City of Los Angeles; mobile home parks are not required to pay interest. Check the section cited below for the full list of exemptions before relying on it.

Q: Can I sue my landlord in small claims court for my California deposit?
A: Yes. California small claims court hears claims up to $12,500, which covers most deposits plus the statutory penalty. A dated written demand that cites Cal. Civ. Code § 1950.5 is the usual first exhibit.

Sources Checked

• LAMC sec. 151.06.02, Rent Stabilization Ordinance deposit-interest rule: official page, read 2026-09-20
• Cal. Civ. Code § 1950.5 (the California statute cited above)
• LeaseLenses California deposit data set, last reviewed 2026-09-19; the same data powers the California demand letter tool
• California landlord-tenant overview and the California deposit rules page

This page is general legal information for Los Angeles, California, not legal advice. Local ordinances are amended more often than state statutes; read the current code text before relying on a figure in court.