City of Pasadena Reminds Landlords of Security Deposit Interest Payment Requirement

Under Article XVIII, Section 1806(f) of the Pasadena City Charter and Chapter 10 of the Pasadena Rental Housing Board Regulations, landlords are required to pay annual interest on all security deposits held for at least one year.

The applicable security deposit interest rate is 0.12%. The interest rate is adopted annually by the Pasadena Rental Housing Board no later than November 1, in accordance with Chapter 10 of the Board's Regulations, and applies to the calendar year that follows.

For the 2025 calendar year, interest must be paid on all security deposits held for at least one year.

How to Calculate the Interest Owed

To calculate the interest owed, multiply the total security deposit by 0.12% (0.0012).

Example:

For a $1,000 security deposit:

$1,000 × 0.12% (0.0012) = $1.20

In this example, the tenant must receive $1.20 in interest.

Interest may be paid to tenants by check, as a rent credit, or by electronic payment, provided that both the landlord and tenant agree in writing to electronic payment.

In addition to issuing payment or providing notice of a rent credit, landlords are required to include a notice to the tenant that sets forth the interest rate applied, and the calculation used to determine the interest amount owed.