Commercial Landlords Needn’t Pay Interest on Deposits
Question: I started a small retail business last year and had to deposit two months’ rent with my landlord. Recently, I inquired as to when I would get the money back and how much interest was earned in 1998. He advised me there was no interest. Do I have any recourse? If the landlord goes bankrupt, what happens to my deposit?
--Peter Blowitz, Camarillo
Answer: California law does not require landlords to pay interest on security deposits on commercial tenancies, unless the tenant negotiates for interest before signing the lease. And even if you try to negotiate interest into your lease, it’s not common for commercial landlords to agree to pay it. Typically, commercial tenants are more interested in putting down one month’s security deposit (rather than two) and forgoing interest, especially during a period of low interest rates in general.
The landlord must return your security deposit to you within 30 days after the lease expires or is terminated. He or she is subject to a $200 fine, plus the amount of the deposit, if the deposit is not returned within that period.
If there is a bankruptcy involving your landlord, you would have a secured claim against that landlord in bankruptcy court. Unfortunately, there is no way to predict whether you would ever get the money back.
--Todd Elliott, president, Hillcrest Realty Services, West Hollywood
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Q: If one wants to know what laws govern the long-distance telecommunications business in California, where should one begin researching?
--C. Chinwah, Los Angeles
A: Start with the California Public Utilities Commission, based in San Francisco, at (415) 703-2782. You can get some information on operating a long-distance service provider at the commission’s Web site: https://www.cpuc.ca.gov. Click on Telecommunications.
You can fill out a registration form online. The form includes details about what kinds of attachments you will need to submit, including a financial statement. Once you get registered and are granted authority to operate as a start-up, you’ll get the rules that apply to you. You may also want to order a manual called “Guidelines for Prospective Non-Dominant Interexchange Carriers,” available through the CPUC’s documents desk at (415) 703-1713.
To order the actual decisions granted on rules, albeit written in cumbersome legalese, call the CPUC’s central files desk at (415) 703-1661, and the documents will be sent to you for a copying fee.
--Joe McIlvain, public utilities regulatory analyst, California Public Utilities Commission
If you have a question about how to start or operate a small business, mail it to Karen E. Klein in care of the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or e-mail it to business@latimes.com. Include your name, address and telephone number. The column is designed to answer questions of general interest. It should not be construed as legal advice.
