In California the maximum security deposit a landlord is allowed to collect is two months’s rent for an unfurnished unit, and three months rent for a furnished unit.

In Los Angeles, the Rent Stabilization Ordinance permits the landlord to increase the security deposit on an existing tenant in the same percentage increase allowed that year for a rental increase (presently 3%). The City of Santa Monica does not permit such an increase.

In the City of Los Angeles, unlike the City of Santa Monica, a tenant in a rent controlled unit is also entitled to interest on their security deposit. This interest is required to paid by the landlord to the tenant annually.

The City of West Hollywood and San Francisco also require the payment of interest on a tenant's security deposit.

In the City of West Hollywood, the Rent Stabilization Ordinance requires landlords to pay interest on a tenant security deposit by January 31st of each year in an amount determined by the City based on prevailing interest rates. For depsoits held for calendar year of 2011, interest of 0.25% was owed in January of 2012. Tenants who did not or do not receive interest on their security deposit from the landlord, may deduct the unpaid interest amount owed to them (up to the last three years) from their rent as of February 1st of each year.

In the City of San Francisco, all landlords are required to pay interest on a tenant's security deposit if held more than one year on its "annual due date." the interest rate for security depsoits held from March 1, 2012 through February 28, 2013 is 0.4%. See Chapter 49 of the San Francisco Administrative Code. If a landlord holds a tenant's security deposit for less than one full year, no interest is due. However, if a landlord holds a security deposit for say one and a half years, the landlord must pay the interest for the full year and the pro-rated amount owed for the second year using the interest rate in effect on the date the tenant vacates.