San Francisco Security Deposit Rules: What the Security Deposit Interest Ordinance Adds to California Law

A landlord in San Francisco has to satisfy two sets of rules at once: the California statute, Cal. Civ. Code § 1950.5, and the city's own Security Deposit Interest Ordinance (S.F. Admin. Code ch. 49). 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 Security Deposit Interest Ordinance adds

• Interest on the deposit: Landlords must pay simple interest annually on every security deposit held for at least one year, by direct payment or rent credit. (Admin. Code sec. 49.2(a)-(b))
• Interest on the deposit: On termination of tenancy the accrued interest must be paid within two weeks after the tenant vacates. (Admin. Code sec. 49.2(c))
• Interest on the deposit: The Rent Board sets the interest rate each year effective March 1 based on the annual average 90-day AA financial commercial paper rate. (Admin. Code sec. 49.2(f))
• Other local rule: Any tenant waiver of the deposit-interest right is void as against public policy. (Admin. Code sec. 49.4)

Who it covers: Deposits on residential rental units in San Francisco; does not apply where rent is assisted or subsidized by a government unit; landlord may deduct the Rent Board fee from the next interest payment (sec. 49.2(e)).
Worth knowing: A lease clause waiving deposit interest is void under sec. 49.4. The landlord may deduct the Rent Board fee from the next interest payment. Deposits on government-assisted or subsidized tenancies are outside the ordinance.

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 S.F. Admin. Code ch. 49.
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 S.F. Admin. Code ch. 49 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 San Francisco require interest on security deposits?
A: Yes. Landlords must pay simple interest annually on every security deposit held for at least one year, by direct payment or rent credit. On termination of tenancy the accrued interest must be paid within two weeks after the tenant vacates. The Rent Board sets the interest rate each year effective March 1 based on the annual average 90-day AA financial commercial paper rate. The Rent Board rate is 4.2% for March 1, 2026 through February 28, 2027 (5.0% the year before).

Q: Is the San Francisco deposit return deadline different from California law?
A: No. The Security Deposit Interest Ordinance 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 Security Deposit Interest Ordinance apply to my unit?
A: Deposits on residential rental units in San Francisco; does not apply where rent is assisted or subsidized by a government unit; landlord may deduct the Rent Board fee from the next interest payment (sec. 49.2(e)). 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

• S.F. Admin. Code ch. 49 (secs. 49.1-49.4), Security Deposit Interest Ordinance: code text, 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 San Francisco, 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.