Opinion ID: 1386980
Heading Depth: 2
Heading Rank: 3

Heading: Interest on the Security Deposit:

Text: The lease required that the Trust hold the security deposit in a separate interest bearing account and pay the interest to Consumers. However, the Trust started paying the interest to itself in March 1985, under the theory that defaults by Consumers amounted to more than interest from the deposit. Although Consumers was in default on certain amounts owed, the Trust wrongfully withheld interest because it never demanded that Consumers pay the penalties, and never provided Consumers with an accounting showing the amounts which satisfied Consumers' debts. A landlord must provide its tenant with an accounting when it withholds funds, whether or not the lease contract provides that the tenant is entitled to the accounting. See, e.g., Chinese Hospital Foundation Fund v. Patterson, 1 Cal. App.3d 627, 81 Cal. Rptr. 795 (1969) (tenant should receive interest on security deposit so long as landlord retains it); Pasadena Hudson, Inc. v. Maggiora, 157 Cal. App.2d 724, 321 P.2d 852 (1958) (tenant is entitled to know the formula by which interest on its security deposit should have been calculated).