Michigan - Security Deposit Escrow

3 Replies

Hello BP! I finally closed on my first rental property in Michigan and have what I think is a fairly basic question. Does a separate bank account need to be setup for each security deposit? Or, can this be deposited into my business banking account I use for all real estate? Finally, does the interest earned go back to the tenant? Thank you all in advance for your help! Good luck out there!

@Michael McIntosh it depends on your state law.  In MD you have to put it in a separate account.. All deposits can go in the same account but it has to be different than you operating account. In MD you do have to pay interest. 

If you don't get a definitive answer here google landlord tenant law Michigan, or security deposit Michigan. Most states are very tough on security deposits. They have to be treated a specific way or you can be liable for triple damages.

@Michael McIntosh whether it is legally required or not I would put them all in a single separate account. Make sure it is an account where there will be no service charges.  

For my first rental My llc did a resolution to allow me to hold the security deposit in a personal account set up for that purpose for the legitimate business reason of avoiding bank service charges.

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