Where to open bank account

Question

Hi,

I am US citizen who live out of the States and I recently bought a property in PA.

I want to open a US bank account for my rental income and am wondering if I can do so in FL, where I plan to visit this week, or is there a benefit to opening an account up where I have the investment property?

Thanks

David Krulac · Answer

PA is also treble damages. Josh C. what you propose is also illegal in PA and MA as well as other states.  The bank does all the work here, reports interest to IRS, and doesn't charge any fee to me, what could be better.

According to landlord.com

http://www.landlord.com/security-deposit-law-guide...

CT, DC, FL, IL, IA, MD, MA, MN, NH, NJ, NM, NY, ND, OH, PA, & VA require.

Chris K. · Answer

@Yael Fuerst:

Here are some other thoughts for you to consider on top of what everyone said. First, one can make a good argument that---at least in PA---you should not keep bulk of your money in the same bank that you also take out a loan from. This is because PA recognizes something called "set-off" rights. This right basically allows a lender to seize the money in the debtor’s bank account when there is a loan default. The contracts you sign with the bank defines the term “default” broadly. So if you ever get into a legal dispute with your lender, the lender will most likely exercise its set-off rights as soon as it can.

Second, note that certain states have more favorable laws when it comes to asset protection. For example, let’s say you are married. In PA, the law presumes that everything you and your spouse own everything you acquire during your marriage as “tenants by the entirety.” One benefit of this is that if someone ever sues your spouse and gets a judgment on the spouse, they generally cannot seize properties held as tenants by the entirety. So this adds a level of asset protection.

Unfortunately, some folks fail to realize that: (1) such protections may not exist in other states; and (2) even if such protection exists, it may not be as protective when compared to PA law. Over the years, I was involved in number of cases where folks suddenly had to face a huge liability because they didn’t realize this fact.

Finally, since you mentioned that you don't live in the states, I would double check the law of the country you currently live in to see if there are any restrictions on the amount of money you can transfer. Some countries imposes various limitations on how much money you can wire to a foreign bank account.

Rich N. · Answer

@Yael Fuerst

A lot of places require you to open tenant escrow account to secure any last month or security deposit dollars to separate their funds from your funds.  Also, some state, including PA and MA require the accounts are open local and/or in interested bearing accounts.

If you were in MA and didn't follow this law (and all its other requirements), the tenant can sue you for treble damages......so if you accepted $1200 that would be $3600 you would owe the tenant by court order!

David Krulac · Answer

Agree with @Rich Ng a bank in both states might be helpful.  I'd also consider a bank that you have or may have in the future a mortgage relationship with.  In PA, I put all security deposits in a bank separate sub-account linked to the tenants SSN, and the interest paid accrues to the tenant and is reported to the IRS under their SSN.  At the bank i use this is a free service, another consideration.  And since the tiny interest accrues to the tenant it complies with state law here in PA. @Yael Fuerst

Rich N. · Answer

@Yael Fuerst

I would check both states to see if there is one national bank in both states.

Not sure if this pertains to you or not, but I would be more worried about your tenant bank escrow account.  In my state the interest bearing bank account has to be open here....so check PA law.

Rich N. · Answer

Josh C.

I agree with you....waste of time.  Not only do we have to put separate accounts, we need to pay the interest every year.  You know all the "paperwork" required just to give the tenants back .01% of interest !

Rich N. · Answer

Josh C. or myself, We can not do that as state law requires the escrow accounts to be interest bearing.

Joe Splitrock · Answer

@Yael Fuerst I would open the account with Wells Fargo because they have the most US locations. Look at a location map and you will see they are everywhere. You may need to open multiple accounts for things like deposits, but once you have one account open then it is easy to open more at the same bank.

David Krulac · Answer

that's require interest to tenants, some other states require seperate bank accounts for security deposits.

Josh C. · Answer

@Rich Ng

In my state if the account bearing interests you have to give to the tenant, but you aren't required to put it in interest bearing account. Glad you jumped in and gave state specific advice. Always good to check your local laws. Seems like a waste of everyone's time to report a few bucks, but the government lives off wasted time. Thanks.

Where to open bank account

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