Berkeley Mun. Code Chapter 13.76 § 13.76.070
Security deposits (Berkeley Rent Stabilization and Eviction for Good Cause Ordinance)
Operative Text
Any payment or deposit of monies by the tenant, the primary function of which is to secure the performance of a rental agreement or any part of such agreement, including an advance payment of rent, shall be held by the landlord, in a fiduciary capacity for the benefit of the tenant and shall accrue simple interest at the rate equal to the average rates of interest paid on six-month certificates of deposit by banks doing business in the City until such time as the payment or deposit is returned to the tenant or entitled to be used by the landlord as provided in Civil Code Section 1950.5 . The interest accrued by said payment or deposit through October 31st of each year shall be returned to the tenant annually in December of each year, either through a rent rebate or cash payment, and shall be at a rate equal to the 12-month average of the average rates of interest paid on six-month certificates of deposit by banks doing business in the City on the first business day of each month for the prior 12 months ending on November 1st, rounded to the nearest tenth. On or before November 15th of each year, the Board shall give public notice of the rate to be effective for the following December. Upon the tenant’s departure from the premises, the balance of any interest accrued since the last October 31st shall be paid at the average monthly rate from the last November 1st to the date of departure and shall be returned to the tenant along with the appropriate part of the principal and any prior unpaid interest. The Board shall compute and publicize the interest rate applicable under this section on an ongoing basis.
Under Berkeley Municipal Code § 13.76.070, money a tenant pays to secure a rental agreement — including advance rent — must be held by the landlord in a fiduciary capacity and must earn simple interest tied to the average rate paid on six-month certificates of deposit by banks operating in Berkeley. Each year, the interest that accrued through October 31st must be returned to the tenant in December, either as a rent reduction or a cash payment, at a rate the Rent Board announces publicly by November 15th. When a tenant moves out, any remaining interest that has built up since the last October 31st is calculated on a pro-rated monthly basis and returned along with the appropriate portion of the deposit principal and any previously unpaid interest.
Plain English — not legal advice.
Operators subject to Berkeley Mun. Code § 13.76.070 generally treat all security deposits and advance rent payments as funds held in trust for the tenant's benefit rather than as operating income. Compliant landlords track the applicable interest rate published annually by the Berkeley Rent Board by November 15th and deliver the accrued interest to each tenant in December — either as a cash payment or a credit against rent. Upon a tenancy's end, a compliant operator calculates the pro-rated interest accrued since the prior October 31st and returns it together with the deposit principal and any outstanding interest owed.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Berkeley Mun. Code § 13.76.070 gives tenants the right to earn interest on their security deposit and any advance rent, with annual payments due each December and a final pro-rated interest payment upon move-out. If a landlord fails to pay the required interest, tenants can raise that failure as a relevant issue in proceedings before the Berkeley Rent Stabilization Board or in small claims court, and may also contact a local tenant-rights organization for guidance on available options. The Berkeley Rent Board publishes the applicable interest rate each year by November 15th, so tenants can verify whether the amount they receive matches the publicly announced rate.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 3, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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