Post date: Aug 02, 2016 6:5:26 PM
Property owners must use the "Berkeley Bank Rate" when calculating the amount of security deposit interest to return to tenants. Property owners are no longer required to provide evidence that deposit funds are kept in Berkeley banks.
The landlord must issue the Security Deposit Interest Refund by January 10th, or the tenant may recover interest at the rate of 10% by notifying the landlord in writing that the tenant intends to deduct the interest from a future rent payment. Please visit the Berkeley Rent Stabilization Board website covering Security Deposit Interest Information by clicking HERE, or see the attached PDF printout of that website page as of August 2, 2016.
The Berkeley Rent Stabilization Ordinance requires landlords to pay tenants interest on their security deposits while being held by the landlord. A security deposit for a residential rental unit is defined as any payment, fee, deposit or charge, that is imposed at the beginning of the tenancy as an advance payment of rent, or to be used for any purpose, including recovering rent defaults, repairing damages caused by the tenant, or cleaning. This does not include an application or screening fee, which must not exceed $45.99. Money paid as the first month's rent isn't considered a security deposit, but money paid in excess of the first month's rent (including "last month's rent") is considered part of the deposit. The payments are to be made annually each December during the tenancy, either as a cash payment or rent rebate, and the balance is paid upon the tenants' departure from the rental unit. (Berkeley Municipal Code section 13.76.070.)
The Rent Board uses a very simple interest calculation to determine the interest payable on security deposits. The same formula applies for annual or move-out interest. The formula applied is:
Partial Year Calculation (used for annual security deposit interest where a tenant moved in during the 12 months ending October 31 or for move-out interest):
(((Interest Rate from either the Annual Payment or Move-Out tables below) X (Deposit Amount))/ 12) X (No. of months since move-in or last deposit payment) = Security Deposit Interest to be Paid
Full Year Calculation (used mostly for annual security deposit refund):
(Interest Rate from either the Annual Payment or Move-Out tables below) X (Deposit Amount) = Security Deposit Interest to be Paid