Does My Landlord Owe Me Interest For My Security Deposit?

Does My Landlord Owe Me Interest For My Security Deposit?

Does My Landlord Owe Me Interest For My Security Deposit?

Someone recently told me that in San Francisco, a landlord is supposed to give tenants a yearly check for the interest accrued on their security deposit. I’ve lived in my (rent controlled) unit for 13-years and have never received that payment. Is it true? (Mind you, my deposit was so small that I think the interest would only amount to about $60.)

Yes, you are correct. It’s amazing to me that more San Francisco tenants don’t realize this. San Francisco Administrative Code 49.2 provides that simple interest shall be paid to tenants who have lived in their units for at least one year. The interest rates for each year are calculated by the San Francisco Rent Board. The interest is payable annually.

But because it’s a law, it’s not actually that simple. There are a couple of details to consider when you are calculating the interest rate for your deposit.

First, you have to subtract your share of the Rent Board fees. Landlords pay annual Rent Board fees to the Rent Board to cover administrative costs. The fees are assessed on a per unit basis. Tenants are responsible for half of the annual fee. Payment is accomplished by deducting the fee from the annual interest owed. If the landlord pays interest annually (many do not) and your security deposit is small, there may be years when you owe him money for part of the fee.

Second, because the statute provides for payment after one year of residency some people get confused about when interest starts to accrue. Occasionally I run into a landlord’s lawyer who doesn’t understand this. They don’t want to count the interest for the first year. I have to remind them that: 1) It’s required in the statute; and 2) It’s one of the few times tenants get to act like Capital One. The interest starts accruing the second the landlord gets his mitts on the dough!

Alright, let’s figure how much interest you’re owed. Here are the instructions from the Rent Board. Let’s take their example, let’s say your lease commenced on November 1, 1996 and you security deposit is $1,000.00. Take a look at the effective rate for 1996-97. It’s 5%. So from 1996 to 1997 you’re owed $50.00. Continue adding it up from year to year until you get to November 1, 2001. Notice the nasty glitch at August 4, 2002 with 3.7% until February 28, 2003. You will have to apply three different interest rates to get back on track with a November 1 anniversary date.

First you have to figure the daily rate from November 1, 2001 though August 3, 2002. That’s 276 days at 5% (276/365 X .05 X $1000.00 = $37.81).

Second you will have to figure the daily rate from August 4, 2002 until February 28, 2003. That’s 208 days at 3.7%. (209/365 X .037 X $1000.00 = $21.19).

Third, you have to figure the daily rate from March 1, 2003 to October 31, 2003. That’s 245 days (245/365 X .012 X $1000.00 = $8.05).

Your total for years 2001-02 and 2002-03 is $67.05. On November 1, 2003 you’ll use the rate 1.2%. Then you’re back on track.

After you have added up all the interest (should be $449.05), the last thing you have to do is subtract $165.00 (the allowable banked Rent Board fees from 1999.)

Given a November 1, 1996 lease commencement date and a $1000.00 security deposit, on November 1, 2009 your landlord owed you $284.05. I’m not going to calculate the 2009-10 partial interest owed.

What a pain…but often very satisfying given that many security deposits are much higher that $1000.00. If your security deposit is so small that you’ll accrue less than the combined Rent Board fees, don’t bother.

Yo, SF Appeal reading techies. There has got to be a way to develop an automatic calculator for this.

Update: The folks at Relisto.com developed a very good security deposit interest calculator. See it on our Tenant Resources page.

Call the Tenant Lawyers now for a free consultation.
(415) 552-9060

My Landlord Says He’s Bankrupt, So How Do I Get My Deposit Back?

My Landlord Says He’s Bankrupt, So How Do I Get My Deposit Back?

My Landlord Says He’s Bankrupt, So How Do I Get My Deposit Back?

Bankrupt landlord.

I vacated my San Francisco, CA apartment over a year ago (I know!) when I was laid off, and never received my deposit. I completed my lease term and left the apartment in excellent condition. Upon moving out, I received an invoice from the landlord stating that I was owed my deposit plus interest. Well, it never came. I sent over a demand letter asking for my deposit to be mailed by a certain date, and just yesterday I received an email from the landlord stating that the property in which I rented a unit has been given to a receiver. I’m assuming this means that the property is now in foreclosure, yes? Anyway, the landlord went on to say that many others that were living in the building have already sued him for their deposits; they’ve all won, but weren’t able to collect because the property no longer makes any money for him. He personally has filed for bankruptcy.

What am I to do at this point? I think the amount in question is too small to take to an attorney’s office (it’s just over $2K), but I don’t think the San Francisco Tenants Union or even small claims can help me out with this one.

I have read various answers online – folks have said, “No, you cannot sue, that’s out of the question!” and someone else said, “The person or company that owns your building must return your security deposit to you. The law is quite clear on this point. On sale of the building, whether an ordinary sale or a foreclosure sale, your security deposit must either be transferred to the new owner or returned to you. And it’s the responsibility of the new owner to collect the security deposit from your former landlord. If the lender didn’t get the security deposit you paid, it’s not your problem. The lender still has to return it to you. If it’s not returned to you within three weeks after you move, you can sue the lender in Small Claims Court, just as you would any landlord, to recover the money.” (This was taken from Tenants and Foreclosure in California). Yet another said, “Sue him anyway in small claims, and try to put a lien on his property. There are other ways to collect!”

That guilty “I know” means you’ve been reading my columns. Once again, dear readers, if you don’t get your security deposit back twenty-one days after you move out and you can prove you deserve it, you gotta sue. Case in point, if this smug sleazeball wasn’t bankrupt a year ago, you’d have a judgment against him. Maybe you could have collected it, maybe not. At the very least you might be on his list of creditors for $6,000.00 rather than in limbo with a smaller chance of collecting $2,000.00!

But all is not lost. First, you need to figure out if the landlord is in foreclosure, if he filed for bankruptcy, or more interesting, if the bank now owns the property. Or even more interesting, is the landlord simply a lying sack of shit? What? You didn’t consider that possibility? Well, dear readers, that’s lesson two for today. Why would you believe anything that comes out of the landlord’s mouth (or ip address) without checking it out?

Get the block and lot numbers for the building. Check out the SF Assessor-Recorder’s website. for the San Francisco Assessor-Recorder’s office. Check the disclaimer and fill in the address. Remember that if your building has a series of addresses use the first one. As I was checking the viability of the link, once again I realized that this is one of the squirreliest websites run by the City. Everyone should write a letter to Phil Ting and tell him to fix it.

When and if you find the block and lot number, go to the Recorded Document Search By Year Menu, also part of the Assessor-Recorder’s site. Use the block and lot search rather than the address search. I’ve found that to be more precise. You won’t be able to see the documents but you should be able to tell if the building is in foreclosure. Check for Notice of Default, or look and the grantor/grantee in the latest deed. If you want to see the documents, you have to go to City Hall.

Next you have to know if the landlord declared bankruptcy. You will have to either visit the U.S. Bankruptcy Court or for online information subscribe to the Public Access to Court Electronic Records (PACER) service. You will have to pay small fees for either means of access.

In a nutshell, if the landlord has filed for bankruptcy, there may be a stay on any lawsuits, meaning you can’t file one against him. You should, whatever the status of the case, contact the trustee and demand to be included in the list of creditors. Civil Code 1950.5(d) is clear, “Any security shall be held by the landlord for the tenant who is party to the lease or agreement. The claim of a tenant to the security shall be prior to the claim of any creditor of the landlord.” Here is where you have the, not ironic, luck of the Irish. The landlord admitted, in writing, to owing you the money.

If the landlord is in foreclosure and still owns the property, but not in bankruptcy, SUE HIM NOW.

If the building has been sold at a Trustee Sale, SUE THE NEW OWNER NOW! Civil Code 1950.5(h) provides for the transfer of security deposits to a new owner and refund to the tenant, if applicable. Civil Code 1950.5(j) states in part, “In the event of noncompliance with subdivision (h), the landlord’s successors in interest shall be jointly and severally liable with the landlord for repayment of the security […]“

Today is the day to think green, that is, about getting your money back. You don’t need a leprechaun for this. You may need a few shots of Jameson. But what you really need are the guts and persistence to stand up for your rights.

Call the Tenant Lawyers now for a free consultation.
(415) 552-9060

Sue For Security Deposit Or SOL?

Sue For Security Deposit Or SOL?

Sue For Security Deposit Or SOL?

I need to sue my former landlord, who I believe held my deposit on an old apartment in bad faith.

I paid $950 for standard security plus a pet deposit on 7/7/07. I was forced to move out on 9/30/07 by my roommate at the time, and had given the landlord more than 30 days notice. However, the landlord refused to return my deposit on the many occasions that I demanded it, with no explanation. I have even attempted to contact the main management company with no luck.

I believe it is a 2-year statute of limitations, but from what date is this calculated? I have several different dates in mind – my move-out date, the 21-day period in which they are required by law to refund, or when I sent the first official demand letter (10/28/07). This has been an incredible hassle and I really want to get my money back – is it still possible?

I get very pissed off when landlords steal tenants’ security deposits. But thinking about statutes of limitation is a total righteous indignation buzz kill. Your question is still a good one because it illustrates that you can’t just sit on your rights because you may lose them.

You mention that your roommate forced you to move out. If the roommate continued to live in the unit, then the landlord had no obligation to return your portion of the security deposit because, as far as he was concerned, the unit was still governed by the existing lease. The landlord does not have to refund the security deposit until the lease is extinguished when everybody moves out. If this is the case, your beef is with your former roommate, not the landlord. There are other possible scenarios that we don’t have space to cover and you should seek specific advice.

Security deposits in California are governed by Civil Code §1950.5. The statute of limitations begins to run when the claim “accrues.” In security deposit cases, the claim accrues on the 22nd day after you move out because the landlord has 21 days to refund.

There is a two-year statute of limitation on claims for the breach of an oral contract. If you do not have a lease or written agreement with your roommate or landlord, your claim may already be going down the drain. Speak to a lawyer immediately and/or file it!

Generally, one has three years to sue for a liability created by statute which could include security deposit actions since they are governed by specific statute like Civil Code §1950.5. It is unlikely that a court would find that this can apply to an oral lease because any action on the lease would be barred after two years. On the other hand, the statute of limitation for a written lease is four years.

Civil Code §1950.5 provides for statutory damages of twice the amount that a landlord wrongfully withholds. In other words if your landlord or roommate kept your dough without any reason you could sue for $950.00 plus $1,900.00 for a total of $2,850.00. It is likely that you would lose the right to collect those damages, but not the original amount, if you had a written lease and you sued the landlord after the three-year limitation for a statutory claim. After four years you’re SOL.

If you are a San Francisco tenant there are two websites that you should bookmark forever in your browser: the San Francisco Rent Board and the San Francisco Tenants Union. There are many other great tenants’ services and resources out there, but between the Rent Board and the TU, you can cover just about everything. The Rent Board site is a treasure trove of general and San Francisco specific information. The Tenants Union site is also very complete, but the best thing about them is they will counsel you about the specific facts of your case and light a fire under your ass to do something about it.

Call the Tenant Lawyers now for a free consultation.
(415) 552-9060

Grand Theft Security Deposit Redux

Grand Theft Security Deposit Redux

Grand Theft Security Deposit Redux

In my blog post Grand Theft Security Deposit, published June 16, 2009, I speculated that hundreds of millions of dollars were pilfered every year in California because landlords unreasonably retained tenants’ security deposits after move out. I pointed out that in my experience as a tenant counselor at the San Francisco Tenants Union, each shift I attended I heard anecdotal evidence that landlords were stealing about $3,000.00. This hasn’t changed.

As you may know I have been conducting a poll on this site for the last several months. The poll asked this: “In your overall experience as a tenant, how much money have landlords stolen from you by keeping your security deposits without cause to do so?” While the sample was small and cannot be conclusive on the matter, to me the results were not unexpected:

29% reported that their landlords never ripped them off;
10% said they lost less than $100.00;
39% claimed they had lost between $101.00 and $1,000.00;
6% said they lost $1,001.00 and $3,000.00;
16% claimed landlords had stolen over $3,000.00.

Is it true that 71% of all tenants have been ripped off in some amount by their landlords? I understand my readers may be biased, yet it is clear from my experience and news accounts that landlords steal tenants’ security deposits. Landlords also collect substantially larger security deposits these days because rents have gone through the roof. The temptation to steal is there and many landlords succumb. What can you do about it?

Demand that small claims limits be raised for real people.

In California, Civil Code §1950.5 governs security deposits. Civil Code §1950.5(n) envisions that security deposit disputes will be resolved in small claims court: “Any action under this section may be maintained in small claims court if the damages claimed, whether actual or statutory or both, are within the jurisdictional amount allowed […]”

The small claims limits should be raised to at least $10,000 if not more.

Currently the maximum a tenant can collect in small claims court is $7,500. What do you do if the landlord kept your $3,000 in bad faith and you want to collect the full amount of statutory damages? Your claim is $9,000, but you can only sue for $7,500.00. It is unlikely that you’ll want to hire a lawyer for thousands of bucks to make $1,500 unless you have other claims or a lease that can get attorney’s fees if you prevail. So you’ll forfeit your $1,500. You’ll eat it.

Last June, San Diego Union-Tribune columnist, Michael Stetz, proposed raising the small claims limit in California to $10,000. He noted that Georgia and Delaware have limits of $15,000 and that even Tennessee has a $10,000 limit. Opponents to raising small claims limits worry that businesses like credit card companies will use higher limits to go after consumers in the easier, cheaper venue of small claims court. But California law already foresees that issue by only allowing natural persons, i.e. real, flesh and blood people as opposed to vampire corporations, to sue for $7,500. Corporations and municipalities can only sue for $5,000. Naturally, I’d suggest that corporations be barred from using small claims court at all. Tenants need to be able to recover all of their damages without the added expense of lawyers and superior court. The small claims limits should be raised to at least $10,000 if not more.

Demand that landlords be required to hold deposits in a separate trust account.

As an attorney, I have to keep a trust account. Why shouldn’t landlords be forced to do the same? Massachusetts, Pennsylvania, New York and other states require landlords to keep separate accounts for tenants’ security deposits. California does not. It’s a no-brainer. If landlords are required to account for security deposits by establishing a trust account, the temptation to spend the dough now and try to withhold it later can be mitigated.

Demand that interest be paid annually on security deposits.

San Francisco already requires that interest be paid annually on security deposits. The interest rates are set by the San Francisco Rent Board. While most landlords “forget” to pay on an annual basis, many tenants are pleased and surprised at the small windfall if the landlords pay the accumulated interest on the deposit at the end of the tenancy. And that’s a big if. I see many instances where landlords don’t pay interest at all and the tenants were unaware of their right to collect it.

Other cities require that interest is paid on security deposits, but this should be mandated on a statewide basis.

Send an email or letter to your state legislators with these demands.

If you do not know who your California legislators are, click this link to find them. If you already know their names, here are links for State Senators and Assemblypersons.

Tell your representatives that these proposals are neither new nor radical. Point out that other states have implemented these requirements and nobody got hurt. Landlord and real estate lobbyists always argue that this type of legislation will put Ma and Pa Cheese Ball out of business. It is simply not true. Requirements like these will only make Ma and Pa a bit more professional while making Mr. Big Slumlord much more accountable.


Demand that a landlord who has not refunded the deposit in 21 days and failed to provide an accounting to the tenant forever loses the right to defend his case.

My business partner Solvejg Rose successfully helped a friend get her security deposit in Florida after the landlord initially refused to refund it.  In Florida, if the landlord does not account for the security deposit to the tenant providing the rationale for retaining it, he waives his right to do so! He cannot later offer any defense why he should not pay the money back. This is powerful medicine, but necessary in California.

Demand that Civil Code §1950.5 also provide a remedy for prevailing party attorneys fees.

Illinois has this provision in their security deposit law. If a tenant wants to engage the services of an attorney rather than suing in small claims court and has a good case, why not take it to superior court with the expectation that she can recover her attorneys fees? The addition of this remedy would make a landlord think long and hard before he arbitrarily withheld a security deposit. The prospect of paying tens of thousands of dollars for the folly would deter many unscrupulous landlords.

Call the Tenant Lawyers now for a free consultation.
(415) 552-9060

Grand Theft Security Deposit

Grand Theft Security Deposit

Grand Theft Security Deposit

I volunteer for the San Francisco Tenants Union two days a week. Each shift runs about two hours. I have been doing this for several years. Every time I’m there, without exception, I speak to at least one tenant who moved out of his or her apartment and the landlord kept the security deposit—sometimes part of it, but most of the time, the whole freaking thing! I see the photos, the carpet cleaning bills and the polite requests for refunds. But the landlord had some remodeling he wanted to do at the tenant’s expense.

I’ve been keeping an informal tally of the money landlords retained in bad faith—that’s lawyerese for pinched, ripped off, stolen. I estimate that I see an average of about $3,000 each time I volunteer. That’s $300,000 per year that just one guy listening to tenants four hours a week knows about. And that’s just from the small percentage of tenants in San Francisco who find their way to the Tenants Union to find out about their rights. A jury in Oakland recently awarded tenants $5.5 million in punitive damages for a landlord’s theft of security deposits. My guess, based on personal experience, is that hundreds of millions of dollars have been pilfered…I mean retained…by landlords statewide!

What can you do as a tenant to stop it? Get familiar with California Civil Code §1950.5. The law provides that you should be able to get your deposit back if you leave the unit in substantially the same condition as you found it absent normal wear and tear. So how do you prove that?

• Take photos of the place before you move in.

• Inspect the unit with your landlord and fill out a move-in checklist delineating the condition of the unit like the kind you initial before you rent a car.

• Clean the oven. Landlords are drawn to ovens like Sylvia Plath, but for different reasons. Greasy, grimy ovens make great incriminating photos.

• Clean the refrigerator.

• Don’t leave garbage piled up around the garbage cans or leave a pile of trash in the street because you think someone might take it .

• Patch nail holes. Use light-weight spackle available in all paint and hardware stores and apply it with your finger not a putty knife. Putty knives leave big square swaths of material that emphasize the patch rather than minimizing it.

• Touch up the patches. Find some matching paint in the garage to touch up the patches. If you can’t find any, take a 2”x 2” sample from a low place in the wall and have the local paint store match the color.

• Inspect the unit with your landlord using a move-out checklist.

• Always, always take photos just before you leave the last time. I suggest that tenants take an establishing shot of each room and then take any detail shots. That way a third party can see things in perspective. Take lots of photos.

Civil Code §1950.5 provides for a move-out inspection to assess items to be cleaned or repaired to justify return of a tenant’s security deposit. I attended one the other day. Of course the landlord was okay with the peeling paint and mold in the shower because that was a condition in the unit when my client moved in, but when she pointed out some dust on the louvered closet doors and tisk tiskingly wagged her bony finger, I about hit the roof.

Yes, there will always be justifications for keeping your money. The landlord who charged $100 per hour to clean the unit or the guy who found the pubic hair on the hardwood floor, took a photo and blew it up as an 8 ½ by 11 for a trial—the ol’ Clarence Thomas defense.

A landlord is required by law to provide you copies of invoices from people who did repairs or cleaning in the unit. If the landlord provides receipts, call the vendors and ask them if they did the work. Sometimes the answer is, no that was just an estimate. Sometime it was work performed in other units.

What do you do when the landlord refuses to refund your security deposit? YOU SUE.

Civil Code §1950.5 also provides statutory penalties for two times the entire security deposit plus the money withheld in bad faith. Write the landlord a letter demanding your money and remind him that he could be liable for treble the amount he kept. Give him few days to pay. If he doesn’t pay, gather up your photos and other evidence and march down to court. Because it is likely you’ll be suing in small claims court, pick up a copy of Everybody’s Guide to Small Claims Court in California, by Ralph Warner for Nolo Press.

I’m usually not one to gin tenants up to sue. It’s a pain in the ass. But this is important.

Only you can stop grand theft security deposit!

Call the Tenant Lawyers now for a free consultation.
(415) 552-9060