Cal. Civ. Code § 250.511b
Interest on Escrow Funds Held More Than Two Years
Operative Text
(a) Except as otherwise provided in this section, all funds over one hundred dollars ($100) deposited with a lessor to secure the execution of a rental agreement on residential property in accordance with section 511.1 and pursuant to any lease newly executed or reexecuted after the effective date of this act shall be deposited in an escrow account of an institution regulated by the Federal Reserve Board, the Federal Home Loan Bank Board, Comptroller of the Currency, or the Pennsylvania Department of Banking. When any funds are deposited in any escrow account, interest-bearing or noninterest-bearing, the lessor shall thereupon notify in writing each of the tenants making any such deposit, giving the name and address of the banking institution in which such deposits are held, and the amount of such deposits. (b) Whenever any money is required to be deposited in an interest-bearing escrow savings account, in accordance with section 511.1, then the lessor shall be entitled to receive as administrative expenses, a sum equivalent to one per cent per annum upon the security money so deposited, which shall be in lieu of all other administrative and custodial expenses. The balance of the interest paid shall be the money of the tenant making the deposit and will be paid to said tenant annually upon the anniversary date of the commencement of his lease. (c) The provisions of this section shall apply only after the second anniversary of the deposit of escrow funds.
Under 68 P.S. § 250.511b, when a residential security deposit exceeding $100 is held in escrow beyond two years, the landlord is required to place those funds in an account at a federally or state-regulated banking institution and notify the tenant in writing of where the funds are held and in what amount. Once an interest-bearing account is required, the landlord may retain one percent per year of the deposited amount to cover administrative costs, while the remaining interest belongs to the tenant and must be paid out annually on the lease anniversary date. These requirements take effect only after the second anniversary of the original deposit.
Plain English — not legal advice.
Operators subject to 68 P.S. § 250.511b who hold security deposits over $100 beyond two years generally ensure those funds are placed in an account at a qualifying regulated institution — such as one overseen by the Federal Reserve Board or the Pennsylvania Department of Banking — and provide written notice to each tenant identifying the bank and deposit amount. Once the interest-bearing requirement applies, compliant operators track the interest earned, retain no more than one percent per annum as the permitted administrative fee, and remit the remaining interest to the tenant on each lease anniversary. Maintaining clear records of deposit dates, account details, and annual interest payments supports compliance with this provision.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Under 68 P.S. § 250.511b, tenants whose security deposits exceed $100 and have been held for more than two years are entitled to written notice identifying the banking institution and deposit amount, as well as annual payment of the interest earned on those funds — minus the one percent per year the landlord is permitted to keep for administrative costs. If a landlord fails to provide the required notice or withheld interest payments, tenants may have grounds to raise this as a violation in a legal proceeding or to file a complaint with a relevant local or state authority. Tenant-rights organizations in Pennsylvania can help explain what remedies may be available under this provision.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated October 10, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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