San Francisco security deposits are governed by two layers of law that are easy to confuse and easy to half comply with. State law limits how much a landlord may hold. City law requires the landlord to pay interest on it every year. They are separate obligations with separate deadlines, and meeting one while missing the other leaves a landlord exposed.
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Layer one: how much can be held
For security collected or demanded from July 1, 2024, California Civil Code section 1950.5 generally limits security to one month of rent, in addition to the first month’s rent paid before occupancy. The statute contains exceptions and provisions for earlier deposits. Check the transaction date and the full current text rather than assuming the newer cap automatically requires a refund of every older deposit.
There is one exception. A small landlord may collect up to two months. To qualify, both conditions must hold: the landlord is a natural person, or a limited liability company whose members are all natural persons, and owns no more than two residential rental properties containing four or fewer dwelling units in total.
That exception does not apply against a servicemember. A landlord who would otherwise qualify for the two month allowance is limited to one month where the tenant is a servicemember.
Layer two: interest, which is where most people slip
San Francisco Administrative Code chapter 49 requires a landlord to pay the tenant annual interest on a security deposit held for more than one year. This covers nearly all residential rentals in the city. The only significant carve out is where rent for the unit is assisted or subsidised by a government agency.
For the period 1 March 2026 through 28 February 2027, the rate is 4.2 percent. The Rent Board sets it annually from the ninety day AA financial commercial paper rate, and it changes every March.
The city guidance describes an annual due date generally tied to when the landlord received the deposit for tenancies beginning after September 1, 1983, with a separate rule for older tenancies. Interest may be paid directly or credited against rent. The guidance also explains eligibility and partial year calculations when a tenant leaves.
Two deadlines, not one
This is the part worth writing down.
State law generally requires an itemized accounting and return of the remaining security within twenty one calendar days after the tenant vacates. Section 1950.5 includes detailed requirements and exceptions concerning supporting documents, estimates, photographs and delivery. A brief summary of the 125 dollar documentation threshold does not exhaust those rules.
San Francisco guidance generally calls for deposit interest to be paid within two weeks after the tenant vacates. Interest eligibility, the partial year calculation and the permitted retention of some accrued interest where the deposit does not cover allowed deductions must also be considered.
The local interest obligation and the state deposit accounting obligation have different timelines and conditions. Track them separately. Do not assume that meeting the state accounting deadline automatically resolves the local interest requirement.
What this means in practice
For a renter, list the first rent payment, the applicable deposit, moving costs and other lawful charges separately. The amount needed depends on the actual agreement and applicable exceptions. Neither a general deposit cap nor a citywide rent estimate establishes the complete cash requirement for a particular move.
For a landlord, identify when the deposit was collected or demanded, which collection limit applied, and whether any exception is relevant. Review local interest obligations separately. Keep the lease, receipts, interest records and any later changes together so the analysis is based on the actual transaction history.
Lease templates and management software can help organize records, but their suitability and supported features must be checked. Optional affiliate resources include LawDepot, LegalZoom, TurboTenant and Rentec Direct. Homzora may earn a commission. A product link is not a guarantee of current legal compliance or automatic San Francisco interest calculations.
None of these substitute for advice from a California attorney on a specific tenancy, and we are not one.
Sources
Sources checked September 19, 2026: California Civil Code section 1950.5, San Francisco Rent Board security deposit guidance and the official interest rate notice for March 2026 through February 2027. Check the applicable period and current law before relying on a rate or deadline.
Homzora is not a licensed real estate brokerage, property manager or law firm. Nothing here is legal advice.
Keep the deposit separate from the rest of the move
A security deposit is only one part of the cash needed before occupancy. A household may also need its first rent payment, moving expenses, utility setup costs and a reserve for unexpected expenses. List each amount separately, with its due date and whether it is refundable. This makes the budget easier to check and avoids treating every payment requested at signing as though it has the same legal purpose.
Names alone do not resolve that purpose. California’s security deposit statute defines security broadly, so calling a payment a cleaning deposit or another type of charge does not automatically place it outside the rules. Ask for an itemized explanation of the amounts requested and compare the explanation with the current statute. A planning calculator adds numbers supplied by the user. It cannot certify that every requested charge is lawful.
Check the date on an existing deposit
The newer collection cap should not be applied to every historical payment without checking the relevant dates. Civil Code section 1950.5 contains a provision addressing security collected or demanded before July 1, 2024. An older deposit and a new demand for security can therefore require different analysis. A landlord or renter reviewing an existing file should identify when the money was requested, when it was paid and whether additional security was later demanded.
Keep the original lease, amendments, receipts and correspondence together. If ownership or management changed, keep the notices that explain what happened to the deposit. Do not assume that a change of manager creates a new deposit obligation or erases the history of the money already held. Where the documents conflict, seek advice about the actual transaction rather than deciding the result from a general headline about a new cap.
Use a deposit ledger with distinct entries
A practical ledger separates the principal from interest paid or credited. Record the original deposit amount, receipt date, any lawful later adjustment, the applicable interest period, the rate used and the date of each payment or rent credit. Attach evidence of the payment or credit. A spreadsheet can help organize those facts, but it should not silently supply a rate or legal assumption that has not been checked.
If a tenant receives an interest credit against rent, both parties should be able to see how that credit affected the amount due. Clear records reduce the chance that an agreed credit is later mistaken for unpaid rent. If the applicable rate or calculation period is uncertain, mark it for review. Do not copy a rate from an old article and treat it as the correct figure for every anniversary or every part of a tenancy.
Document condition at the beginning and the end
Photographs, a written condition record and copies of repair communications help establish what changed during occupancy. Take clear pictures of each room and specific existing damage when possession begins. Keep the original files and note the date. If a problem is reported later, preserve the message and any response. A collection of dated records is more useful than a general recollection that the apartment was already worn.
California’s current statute also includes landlord photographic documentation requirements tied to specified dates and circumstances. These requirements are separate from the practical value of a renter’s own photographs. Consult the current text and the California Courts guide when preparing an accounting. A list of claimed costs should be supported by the records the law requires, rather than by a generic statement that cleaning or repairs were necessary.
Understand the role of the initial inspection
The California Courts guide explains the opportunity for an inspection before the tenancy ends. The inspection process can identify conditions the landlord expects to address through deductions and can give the tenant an opportunity to remedy appropriate issues. It is useful to understand that process before moving day. Ask how the inspection will be arranged, keep the written notices and retain any statement supplied afterward.
An inspection does not turn every disagreement into an automatic deduction, and it does not eliminate the need to consider ordinary wear, preexisting conditions or the statutory requirements for an accounting. Review the actual documents rather than assuming that attending an inspection settles every issue. Where a particular tenancy falls within an exception or a dispute is already underway, obtain advice suited to those circumstances.
Build a calendar around the actual tenancy
Several dates can matter: receipt of the deposit, an annual interest date, notice of termination, a requested initial inspection, surrender of possession and the accounting deadline. Put them on one calendar but give each a separate label. Confusing two dates can produce a missed obligation even when the underlying money calculation is correct. Keep supporting messages and proof of delivery with the calendar entry.
Do not assume that every deadline can be extended by an informal conversation. Equally, do not assume that a general article describes every agreement or statutory exception. The current California statute contains detailed rules for itemization, documentation and delivery. A complete compliance review needs those provisions and the facts of the tenancy. The calendar is an organizational tool that helps a person ask the right questions; it is not a substitute for that review.
Read an accounting as a set of claims to verify
When an accounting arrives, compare the original amount held, the amounts deducted, the explanation for each deduction and the balance returned. Check whether the documents support the work described and whether the claimed condition is visible in the records from the beginning and end of the tenancy. Keep disagreements specific. A clear question about one charge is more useful than a general accusation that the entire statement is wrong.
The California Courts guide describes steps people can consider when they disagree about a deposit. Preserve the accounting, envelope or delivery record, photographs, receipts and communications. If a matter cannot be resolved, those records help an adviser understand the dispute. This article does not determine whether a particular charge should be paid or prescribe a litigation strategy. It explains why careful records and accurate dates matter before a disagreement develops.
Choose tools for record keeping, then verify the rules
A lease template or property management platform may help organize documents, but a product name is not evidence that a particular lease complies with every current state and local requirement. Confirm the jurisdiction, publication date, supported features and limits of any product before using it. In particular, verify whether interest calculations require manual rates or settings. Do not assume software automatically applies San Francisco rules correctly.
Homzora provides housing research and planning information. For the governing requirements, read California Civil Code section 1950.5, the California Courts security deposit guide and the current San Francisco Rent Board guidance linked below. Consult a qualified local adviser about an individual tenancy. Keep any source date with the records so that a later reader can tell which version informed a decision.