Security Deposit - Held In Trust Or Not?

It is an understandable to assume that, when you entrust someone with your money, to hold and use only under certain conditions, and to return the money back to you when/if those conditions don't apply, the money are held by someone in trust for you (Dillon v. Cross (URL upd. 06/26) (1907) 5 Cal.App. 766; Spencer v. Duncan (1895) 107 Cal. 423), or as a bailee (Niiya v. Goto (1960, Cal App 2d Dist) 181 Cal. App. 2d 682; CC § 1814).

Not so with the security deposits. The court in Korens v. R. W. Zukin Corp. (1989) 212 Cal.App.3d 1054, ruled that the money held by the landlords as security deposits create a debtor-creditor relationship, but are not held in trust, citing in support CC § 1950.5(d). (Id. at 1058-1059). Is the Korens Rule absolute? As it is with many legal concepts,  the answer is "it depends."

City of Richmond, CA, enacts Rent Ordinance

Our neighbor city across the Bay became the latest municipality to enact a rent ordinance. It was adopted on August 5, 2015, and is codified as Richmond Municipal Code, Article XI, Section I, Chapter 11.000, named the "Rent Control and Just Cause for Eviction" ordinance. It goes into effect on September 4, 2015, 30 days after its adoption.
[UPDATE 10-1-2015: the ordinance is suspended (URL upd. 06/26) while placed on the referendum ballot for voting]

Interest on security deposits in SF - paid annually and on all units, except subsidized

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.

Dog Law

Dogs are in the spotlight lately. Governor Brown has recently signed into law a new act allowing statewide access for dogs in restaurants. There is also an ongoing debate of a too flexible and uncontrollable approach of "service animals," proliferating in great numbers, especially in San Francisco (URL upd. 06/26), who are often confused with rigorously trained guide dogs. San Francisco also now amended its Health Code (URL upd. 06/26), by adding Article 39, which codified a "commercial dog walker," which is in effect since April 21, 2013. How all these developments affect the landlord-tenant relationship?

Drafting the Owner Move-In Notice in San Francisco

Termination of tenancy starts from drafting and serving the notice of such termination, and the importance of making that notice as accurate and complete as possible is hard to understate. If the notice is defective, the landlord most likely will have to go back to the square one, starting the whole process again by reissuing and reserving the notice. Sometimes, months will pass before the landlord finds out about the deficiency. It may become a very expensive mistake to learn.

This article concentrates on the elements of a notice of termination of tenancy on the grounds of owner's move-in, the so called "OMI notice." It has quite a few elements and steps to be concerned about.

ATTENTION: this article was published in 2014, and things have changed since. Commencing on January 1, 2018, significant changes in the OMI/RMI procedure came into force. Read more here.  This is a fluid area of local law, your diligence in checking with the latest version of the law currently in force is required.

Interest on Security Deposits: State view vs. San Francisco

California's general rule is that the landlord is not required to pay interest on the tenant's security deposit. The return of a residential security deposit is covered by the Cal. Civ. Code, Section 1950.5, and, as the case Korens v. R. W. Zukin Corp., 212 Cal. App. 3d 1054 (1989) indicated, "[a]lthough the subject of security deposits given in connection with the rental of residential properties has been extensively regulated by the legislature, Cal. Civ. Code § 1950.5, no provision of state law imposes the additional requirement that interest be paid on security deposits by landlords."