Fairness for tenants
Landlords should pay interest on security deposits
Anyone who has ever rented lodgings knows that, when it comes to the security deposit, landlords have all the power. Not only do they sit on your deposit for as long as the place is rented without paying interest, they and only they determine how much of your money you get back.
We understand that not all renters take good care of their dwellings and that cleaning and repair costs sometimes exceed the amount of the security deposit. But that doesn’t justify what amounts to legalized theft on the part of landlords.
A bill now working its way through the State Legislature would change that. Senate Bill 603, by Sen. Mark Leno (D-S.F.), would do three things: (1) require landlords to keep security deposits in separate accounts; (2) impose penalties on landlords who fail to return deposits; and (3) require that landlords pay tenants interest on security deposits. The last requirement is already in effect in some California jurisdictions and in many other states.
There are 15 million renters in California. For many of them, their security deposit is their largest financial asset. But improper withholding by landlords has become so common that most renters don’t expect to see their money again. When the advocacy group Tenants Together surveyed its members, it found that 60 percent of them had had their deposits improperly withheld.
It’s only right that, when a landlord asks you for a significant sum of money to hold as a deposit, that he or she be required to handle that money as if it were yours by putting it into a separate, interest-bearing account for the duration of your tenancy. SB 603 would be a welcome reform of landlord-tenant laws in California.