RSO security deposit interest in 2026 is 3.03% simple interest, a rate set by LA’s Rent Adjustment Commission. On a $2,000 deposit held all year, that comes to $60.60, or $5.05 a month.

The rate comes from LAHD Bulletin #44, revised January 13, 2026. It applies to deposits held for at least one year in rent-stabilized units in the City of Los Angeles.

Which rentals owe security deposit interest?

The rule covers units under the Rent Stabilization Ordinance (RSO). The bulletin describes rentals with a certificate of occupancy first issued before October 1, 1978. That includes:

• Apartments, condos, and duplexes
• Suites and guest rooms
• Hotel, motel, rooming house, or boarding house rooms occupied by the same tenant for more than 30 consecutive days

Mobile home parks are excluded. Not sure about your building? Start with LAHD’s RSO overview. This post covers the City of LA only, so check local rules if your rental is in another city.

How do you calculate RSO deposit interest?

Use simple interest: multiply the deposit by that year’s rate. Interest accrues monthly, and each year has its own rate, so don’t apply 3.03% to earlier years.

Here is a $2,000 deposit held for three full calendar years with no interest paid yet:

For longer tenancies, the bulletin lists every rate back to November 1, 1990. No interest was required for 2002.

There is a second option: pay the interest the deposit actually earned. You must then give the tenant a bank statement showing that interest. If the deposit isn’t in an interest-bearing account, use the simple rate. The municipal code also applies the commission’s rate if statements aren’t provided with the payment.

When do you have to pay it?

The timing depends on where the tenancy stands.

During the tenancy. You may pay monthly or yearly. You can pay the tenant directly or give a rent credit. You choose the method, and you must tell the tenant in writing. The Apartment Association of Greater Los Angeles says paying only at the end of a tenancy doesn’t comply.

At move-out. Pay any unpaid interest at the same time and in the same manner as the deposit. Under California Civil Code section 1950.5, the deposit or an itemized statement is due within 21 calendar days after the tenant moves out.

When you sell. Accumulated interest is handled the same way as the deposit when your interest in the property ends. Include it when you transfer deposits to the buyer or return them to tenants.

What happens if a landlord doesn’t pay?

The tenant can sue for the amount owed, including in small claims court. The California courts’ guide puts a tenant’s small claims limit at $12,500. LAHD’s Rent Stabilization Division does not investigate non-payment complaints, so an owner may not hear about a problem until a claim is filed.

A simple yearly routine for owners

1. List each RSO unit, its deposit amount, and the date you received it.
2. Check how much interest has been paid, and when.
3. Look up each unpaid year’s rate in the current bulletin.
4. Pick direct payment or a rent credit, and notify the tenant in writing.
5. Keep a record of each payment and notice.

The 2027 rate was on the commission’s September 10, 2026 agenda. Check for LAHD’s updated bulletin before you calculate 2027 interest.

If you’re a renter

Check when you paid your deposit, and whether you’ve received payments or rent credits. If not, ask your landlord in writing. You can reach LAHD at 866-557-7368 with RSO questions.

FAQ

Do tenants get deposit interest if they stayed less than a year? At move-out, only tenants whose deposits were held for one year or more are entitled to accumulated interest under the RSO.

Can a landlord pay security deposit interest as a rent credit? Yes. The landlord can choose a direct payment or a rent credit, and must notify the tenant of that choice in writing.

Does every LA rental owe security deposit interest? No. This City of LA rule covers RSO units and excludes mobile home parks. Rentals outside the RSO or the city don’t fall under this rule.

Need help with deposits at your building?

Studio B DTLA manages residential and commercial rentals in Los Angeles. Contact us or call +1 424-367-3670 to talk through your property.

This article is general information, not legal advice. Rules change, so check with LAHD or a qualified attorney before you act.