I've been at the Rent Board last Friday and overheard a conversation regarding payments on security deposits. I thought you might be interested to find out that:
(1) - The interest is paid annually, not when the tenant vacates [Section 49.2(b)];
(2) - The interest is paid also on the units exempt from the rent control; only government-subsidized units (Section 8, SFHA, etc.) are not subject to it.
More details are here:
http://www.sfrb.org/index.aspx?page=960
One useful way of applying the interest is suggested in using toward tenant's portion of the Rent Board fee.
Approved rates of the interest are published here.
Notice that the last paragraph in the instruction still says that the interest is paid within 2 weeks after the tenant vacates. The first and second paragraphs state that the interest is paid annually. I understood this as that only the interest for the remaining time of the most recent year is paid within these 2 weeks, while all the earlier years are paid annually, on the rent's anniversary.
Don't worry too much about this yet, currently "[o]ther than payment of the past interest owed, Chapter 49 does not provide for any penalties for the late payment of interest." Preamble to Section 49 also clearly states that the Rent Board does not have jurisdiction over this subject.
Interestingly, the issue of mandating landlords to pay interest on security deposits was litigated and reached two opposite results: 3% under Santa Monica Rent Ordinance was a taking. (Action Apt. Ass'n v. Santa Monica Rent Control Bd. (2001) 94 Cal.App.4th 587), but 5% under the San Francisco Admin Code, Section 49.2 was not a taking. (Small Property Owners of San Francisco v. City and County of San Francisco (2006) 141 Cal.App.4th 1388). The court in the latter case declined to follow Santa Monica decision. I still invite you to read it, it is well-written and with exceeding detail.
(2) - The interest is paid also on the units exempt from the rent control; only government-subsidized units (Section 8, SFHA, etc.) are not subject to it.
More details are here:
http://www.sfrb.org/index.aspx?page=960
One useful way of applying the interest is suggested in using toward tenant's portion of the Rent Board fee.
Approved rates of the interest are published here.
Notice that the last paragraph in the instruction still says that the interest is paid within 2 weeks after the tenant vacates. The first and second paragraphs state that the interest is paid annually. I understood this as that only the interest for the remaining time of the most recent year is paid within these 2 weeks, while all the earlier years are paid annually, on the rent's anniversary.
Don't worry too much about this yet, currently "[o]ther than payment of the past interest owed, Chapter 49 does not provide for any penalties for the late payment of interest." Preamble to Section 49 also clearly states that the Rent Board does not have jurisdiction over this subject.
Interestingly, the issue of mandating landlords to pay interest on security deposits was litigated and reached two opposite results: 3% under Santa Monica Rent Ordinance was a taking. (Action Apt. Ass'n v. Santa Monica Rent Control Bd. (2001) 94 Cal.App.4th 587), but 5% under the San Francisco Admin Code, Section 49.2 was not a taking. (Small Property Owners of San Francisco v. City and County of San Francisco (2006) 141 Cal.App.4th 1388). The court in the latter case declined to follow Santa Monica decision. I still invite you to read it, it is well-written and with exceeding detail.
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Your options and available strategies will depend on your case's particular facts. To learn more about your rights and obligations, make your first step toward taking control over the circumstances, and call my office at (415) 987-7000. I will be glad to assist in guiding you through the jungle. The only thing you can't afford is to stay put and uninformed. My office provides a confidential assessment of your particular scenario, free of charge, and I will share with you the results of the analysis along with my thoughts on available solutions.
Your options and available strategies will depend on your case's particular facts. To learn more about your rights and obligations, make your first step toward taking control over the circumstances, and call my office at (415) 987-7000. I will be glad to assist in guiding you through the jungle. The only thing you can't afford is to stay put and uninformed. My office provides a confidential assessment of your particular scenario, free of charge, and I will share with you the results of the analysis along with my thoughts on available solutions.
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