Renting in San Francisco means putting down a large deposit in one of the most expensive rental markets in the country. Zillow’s Observed Rent Index for San Francisco reached about $4,683 a month in August 2026, up about 25 percent from a year earlier (Homzora San Francisco dataset, Zillow ZORI). The Census Bureau’s longer run measure, the median gross rent paid by occupied rental homes over 2020 to 2024, was $2,476, with a median of $2,455 for a one bedroom (Homzora San Francisco dataset, Table B25031).
San Francisco renters are protected by two layers of deposit rules: California’s statewide law in Civil Code Section 1950.5, which changed significantly in 2024, 2025, and 2026, and a city requirement that landlords pay interest on deposits every year. This guide explains both.
Homzora is a housing research publisher, not a law firm. This article explains California and San Francisco rules in plain English and is not legal advice for your situation.
The statewide cap: one month’s rent
For deposits collected on or after July 1, 2024, a California landlord generally may not collect more than one month’s rent as security, whether the unit is furnished or unfurnished (Cal. Civ. Code § 1950.5(c); San Francisco Rent Board).
A small landlord exception allows up to two months’ rent when the landlord is a natural person, or an LLC whose members are all natural persons, that owns no more than two residential rental properties with no more than four units offered for rent in total. That exception does not apply when the prospective tenant is a servicemember (§ 1950.5(c)(5)). In San Francisco, where many renters lease flats in two to four unit buildings owned by individuals, this exception comes up often. Ask the landlord which rule it is applying.
The cap does not prevent a landlord from accepting an advance payment of at least six months’ rent on a lease of six months or longer (§ 1950.5(c)(2)).
San Francisco’s deposit interest rule
San Francisco requires landlords to pay interest on security deposits. According to the Rent Board, the requirement applies to all residential rental units in the city, including units exempt from the Rent Ordinance, except where the rent is assisted or subsidized by a government agency (San Francisco Rent Board, Security Deposits).
| Period | Interest rate |
|---|---|
| March 1, 2025 to February 28, 2026 | 5.0 percent |
| March 1, 2026 to February 28, 2027 | 4.2 percent |
Interest is simple, not compounded, and is due each year on the anniversary of the date the landlord received the deposit. If you move out between anniversaries after the first year, the partial year’s interest is prorated, and interest owed at move out must be paid within two weeks after you vacate. For units covered by the Rent Ordinance, the landlord may deduct 50 percent of the annual Rent Board fee from the interest payment (San Francisco Rent Board).
For example, the Rent Board notes that a $1,000 deposit at 4.2 percent earns $42 in annual interest. A deposit equal to the one bedroom median gross rent of $2,455 would earn about $103 a year at that rate.
What may be deducted
The California Courts Self Help Guide lists the permitted deductions: unpaid rent; cleaning needed to return the unit to the level of cleanliness it had at move in; repairs for damage beyond normal wear and tear caused by the tenant or guests; and restoring or replacing furniture or other items included in the rental if damaged beyond normal wear and tear (California Courts Self Help, Security Deposits). Normal wear and tear is not deductible.
California also prohibits leases from calling any security “nonrefundable” (§ 1950.5(n)).
Moving out, step by step
1. Request the initial inspection
After you give notice, the landlord must tell you in writing of your right to request an inspection (California Courts Self Help). If you request it, the inspection occurs no earlier than two weeks before your tenancy ends, and it gives you a chance to fix listed items before you leave (§ 1950.5(f)).
2. Expect photographs
Since April 1, 2025, landlords must photograph the unit within a reasonable time after you return possession and before any repairs or cleaning they will deduct for, and again after that work is complete. For tenancies beginning on or after July 1, 2025, landlords must also photograph the unit at the start of the tenancy (§ 1950.5(g)).
3. Watch the 21 day deadline
No later than 21 calendar days after you vacate, the landlord must send an itemized statement of any deductions and return the remaining deposit (§ 1950.5(h)). Copies of receipts or invoices for repairs and cleaning are required unless those deductions total $125 or less (California Courts Self Help).
4. Know how the money must come back
Effective January 1, 2026, if your landlord received your deposit or rent electronically, the remaining deposit generally must be returned electronically to an account you designate in writing, or by another electronic method you agree to in writing, unless you agree in writing to a different method (§ 1950.5(h)).
If you disagree with a deduction
The Rent Board explains that it does not have jurisdiction over state law deposit disputes. Its listed options include small claims court, a mediation or arbitration service, the District Attorney’s Consumer Fraud Unit, or consulting an attorney. Small claims cases cannot exceed $12,500, and attorneys may not represent parties at the hearing (San Francisco Rent Board).
If a court finds the landlord kept the deposit in bad faith, it may award statutory damages of up to twice the amount of the security, in addition to actual damages (§ 1950.5(m)).
A sample demand letter
If the 21 day deadline passes without a refund or a proper itemized statement, or you dispute a deduction, a written demand is the next step:
Date: 2026. To: [landlord]. Re: Security deposit for [address, unit]. I vacated on 2026. Under California Civil Code Section 1950.5, you were required to return my deposit or provide an itemized statement within 21 calendar days, with receipts or invoices for repair and cleaning charges unless those charges total $125 or less. [I have not received either.] [I dispute the following deductions: (list), because (reasons), as shown in the attached photos.] Please return [amount] by 2026. If the deposit is retained in bad faith, Section 1950.5 allows statutory damages of up to twice the amount of the security in addition to actual damages. Sincerely, [name].
Keep a copy and proof of delivery. If the matter goes to small claims court, bring the letter, the lease, your photos, and any itemized statement you received (California Courts Self Help).
Build your evidence file
- The signed lease and any addenda.
- Proof of the deposit amount you paid and how you paid it, which matters for the electronic refund rule (§ 1950.5(h)).
- Your own dated move in and move out photos and video.
- Copies of the landlord’s photos, which you can request, since landlords must now take them (§ 1950.5(g)).
- The initial inspection notice and any list of proposed deductions.
- All repair requests and responses during the tenancy.
Mistakes San Francisco renters make
- Skipping the initial inspection. It is the one chance to learn what the landlord plans to charge while you can still fix it (§ 1950.5(f)).
- Not giving a forwarding address or refund account. The landlord needs to know where to send the money.
- Accepting a lump sum “cleaning fee” without receipts. Documentation is required unless repair and cleaning deductions total $125 or less (California Courts Self Help).
- Waiting too long to act. Send your demand promptly after day 21 while records are fresh.
Frequently asked questions
My unit is not rent controlled. Do I still get deposit interest?
Yes, according to the Rent Board, the interest requirement applies to all residential rental units in San Francisco, including units exempt from the Rent Ordinance, unless the rent is government assisted or subsidized (San Francisco Rent Board).
Can the Rent Board order my landlord to return my deposit?
No. The Rent Board states that it does not have jurisdiction over these disputes and its staff cannot give legal advice on them (San Francisco Rent Board).
Is my landlord allowed to charge two months?
Only if it qualifies for the small landlord exception and you are not a servicemember (§ 1950.5(c)(5)).
The building was sold. Who returns my deposit?
When a landlord’s interest ends, the statute allows the landlord to transfer the remaining security to the successor in interest, with notice requirements (§ 1950.5(i), (j)). Ask the new owner in writing to confirm the amount held.
Explore San Francisco’s data
Rent trends, bedroom level rents, renter cost burden, and housing types are free to download in Homzora’s San Francisco data library.
Sources
- California Civil Code § 1950.5, as amended effective January 1, 2026, via Justia
- San Francisco Rent Board, Security Deposits
- California Courts Self Help Guide, Security Deposits
- Zillow Observed Rent Index for San Francisco, via Homzora
- U.S. Census Bureau, ACS 2020 to 2024 5 year estimates, Table B25031, via Homzora