Pennsylvania Security Deposit Escrow Account
How do you buy and hold investors out there handle security deposits in PA -- or other states that require deposits over a certain limit ($100, in PA) be placed in true Escrow Accounts?
My dilemna is such: the banks in this area will only let me open a true Escrow Account (where the account is linked to the renter's social security number) that has a minimum deposit of between $2000 and $2500. My security deposit is only $1500 in most cases. If I opened such an account with the $1500, there will be a $10/month monthly service charge from the bank. Since I am not allowed to touch money in the Escrow Account until the renter moves out, it is technically their money and they are getting hit with those bank fees.
The options I see:
1. Open the true escrow account for each renter (it's a quad apartment building with $1000-$1500 rents). The banks will charge $10/month per account (ridiculous).
2. Open a business money market account that is used strictly for "Escrow" payments. This will not be linked to their social security numbers, so I am assuming it would then be counted as income on my part. Do my own bookkeeping on whose money is in there, track interest for their deposits, etc. My RE lawyer advises against this: "failure to have a separate escrow account will forfeit your right to security deposit funds in all instances." In certain instances, the penalties for NOT keeping it in an Escrow account could result in me owing them double.
3. Not charge a security deposit but instead charge a "move-in fee" that would be about half of what I would typically charge for a security deposit -- as I saw suggested on this site. This is riskier if they flee, damage property, etc... but would be better than collecting nothing at all. This option relies heavily on a great tenant screening process (but that's never bulletproof).
Does anyone know of any Escrow Accounts that can be setup for free anywhere, even online? Accounts that don't have monthly maintenance fees? I would think that a bank would be eager to have control of these deposits for at least a year, no?
Thanks for your help!