Berkeley requires annual deposit interest at the city-published Berkeley Bank Rate — and if last year’s interest is unpaid by Jan 31, it is recomputed at a 10% rate and deductible from rent — on top of California's § 1950.5 rules.
Both California law and Berkeley's ordinance apply to you.
California Civil Code § 1950.5 applies in full: a 21-day return deadline, up to 2× for bad-faith withholding plus actual damages, the one-month cap (AB 12), and the AB 2801 photo-evidence rules. Berkeley adds the interest layer on top.
Berkeley penalty
10% rate + overcharge route
City ordinance — separate remedy
Two city-level mechanisms exist. First, deposit interest: if the annual interest has not been refunded by January 31, the tenant may recover it by deducting it from rent — automatically, with no notice required — and the immediately preceding year’s interest is recomputed at a 10% rate instead of the published Berkeley rate (Regulation 704; earlier years use the published table rates). Second, wrongful retention of the deposit itself: Regulation 706(A) deems a deposit retained in violation of Civil Code § 1950.5 a rent overcharge, recoverable through the Rent Board’s petition process within three years — with remedies including recovery of the overcharge and, on a bad-faith claim or retention, up to $750 in addition to actual damages. State § 1950.5 remedies also remain fully available.
California penalty
up to 2× + actual damages
State law — still applies
A landlord who retains the deposit in bad faith is liable for statutory damages of up to twice the amount of the security deposit, in addition to the tenant’s actual damages, under § 1950.5(m).
These are two distinct remedies under two different laws — they are not the same claim, and one does not replace the other. The California return deadline of 21 days still applies.
Interest rate — published annually: Berkeley sets a "Berkeley Bank Rate" each year; your letter references the current published rate rather than a hardcoded number. The 10% in Regulation 704 is a substitute RATE for the immediately preceding year’s unpaid interest — not a 10%-of-deposit penalty added on top — and it attaches automatically after January 31 with no notice required.
Yes. California Civil Code § 1950.5 applies in full: a 21-day return deadline, up to 2× for bad-faith withholding plus actual damages, the one-month cap (AB 12), and the AB 2801 photo-evidence rules. Berkeley adds the interest layer on top.
Pay annual security-deposit interest, due by December each year Use the annually-published Berkeley Bank Rate Refund any unpaid interest by January 31 — after that date the tenant may deduct it from rent, with the preceding year’s interest recomputed at a 10% rate (Reg. 704)
Two city-level mechanisms exist. First, deposit interest: if the annual interest has not been refunded by January 31, the tenant may recover it by deducting it from rent — automatically, with no notice required — and the immediately preceding year’s interest is recomputed at a 10% rate instead of the published Berkeley rate (Regulation 704; earlier years use the published table rates). Second, wrongful retention of the deposit itself: Regulation 706(A) deems a deposit retained in violation of Civil Code § 1950.5 a rent overcharge, recoverable through the Rent Board’s petition process within three years — with remedies including recovery of the overcharge and, on a bad-faith claim or retention, up to $750 in addition to actual damages. State § 1950.5 remedies also remain fully available. This is a separate remedy from the California state penalty, which also applies: A landlord who retains the deposit in bad faith is liable for statutory damages of up to twice the amount of the security deposit, in addition to the tenant’s actual damages, under § 1950.5(m).
Berkeley Municipal Code § 13.76. We verify these against the ordinance text itself; the date we last checked is shown on this page.
Sources & verification
The Berkeley rules on this page were verified against the ordinance text itself:
Last verified against primary sources on .
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Berkeley sits on top of California's statewide security deposit law. Read the full California rule →
Your letter cites the Berkeley ordinance and the California statutes that apply to your situation.
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