Involved In Real Estate · Everett, MA · Member since 2013 · 51 posts · 4 votes
Hi All,
I am a first-time landlord in Massachusetts and just received a security deposit and last month of rent from my 2 new tenants. I am familiar with the rules surrounding the deposits, but do any of you have any banks that you would recommend for me to use?
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
12y
Also if you opened your account in another state make sure the new account is a Massachusetts one. I have a Bank of America account which is still a NJ account(opened several mergers ago with a different bank), I had issues linking it to some MA accounts unless I change the main account to a MA account. Normally not an issue but good to know if you started out in another state. Santander also merged so the NJ to MA link was a problem there too. If this applies to you ask when opening the account otherwise just extra info. I closed Santander and a year later they still send alerts from my account , doesn't instill confidence.
Landlord and Rehabber · Newton, MA · Member since 2010 · 2k+ posts · 877 votes
12y
For simplicity just put them in the same bank that you have your rental checking account setup with.
No real advantage to finding the best security deposit account.
If you have it in the same bank though it will be easier to transfer the $1-3 of interest you will need to send them every year on the security deposit. :)
Involved In Real Estate · Everett, MA · Member since 2013 · 51 posts · 4 votes
12y
Thanks for the response @Shaun Reilly I am not at all concerned with their minuscule return from the interest, just was a little fuzzy on the rules where they talk about the bank having to be a Massachusetts bank. Does that just mean that I just can't use an online banking account like the one I have for ING/Capital One, but could use banks like Citizens Bank or Bank of America which have branches in MA?
I actually also still have to set up an account to deposit my rental checks so that for tracking purposes they are separate from my regular checking account that I have at Citizens Bank. So with that said, I am interested to hear other people's opinions on what Massachusetts banks they prefer to use in general which can be used for security deposits. I would prefer a bank with low or no fees and has a good online platform.
Thanks for the response @Shaun Reilly I am not at all concerned with their minuscule return from the interest, just was a little fuzzy on the rules where they talk about the bank having to be a Massachusetts bank. Does that just mean that I just can't use an online banking account like the one I have for ING/Capital One, but could use banks like Citizens Bank or Bank of America which have branches in MA?
I actually also still have to set up an account to deposit my rental checks so that for tracking purposes they are separate from my regular checking account that I have at Citizens Bank. So with that said, I am interested to hear other people's opinions on what Massachusetts banks they prefer to use in general which can be used for security deposits. I would prefer a bank with low or no fees and has a good online platform.
You can use a bigger bank for this stuff, the branch just has to be in MA. Which does mean that yes you can not use an online bank like CapOne360 for the security deposits.
However if you use, and are happy with, Citizen's you can use them (assuming you use a branch in MA). If you don't like them then field suggestions.
I have been using Santander (Sovereign) the last several years. Don't love them but don't hate them. Online isn't bad and all my accounts are linked on there which makes things easy (such as the getting the security deposit interest moved to the business checking to send out the stupid checks). Main reason we moved stuff there was that the branch is a 5 minute walk from the house and I'm a trustee of my condo association and that is where that account is held so I needed to go there regularly anyway.
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
12y
Also if you opened your account in another state make sure the new account is a Massachusetts one. I have a Bank of America account which is still a NJ account(opened several mergers ago with a different bank), I had issues linking it to some MA accounts unless I change the main account to a MA account. Normally not an issue but good to know if you started out in another state. Santander also merged so the NJ to MA link was a problem there too. If this applies to you ask when opening the account otherwise just extra info. I closed Santander and a year later they still send alerts from my account , doesn't instill confidence.
Thanks for the response @Shaun Reilly I am not at all concerned with their minuscule return from the interest, just was a little fuzzy on the rules where they talk about the bank having to be a Massachusetts bank. Does that just mean that I just can't use an online banking account like the one I have for ING/Capital One, but could use banks like Citizens Bank or Bank of America which have branches in MA?
I actually also still have to set up an account to deposit my rental checks so that for tracking purposes they are separate from my regular checking account that I have at Citizens Bank. So with that said, I am interested to hear other people's opinions on what Massachusetts banks they prefer to use in general which can be used for security deposits. I would prefer a bank with low or no fees and has a good online platform.
BANK of America has tenant accounts where they can deposit the money but it's all they can do . That way you can check online to verify payment . you can have free accounts if your balance is over a certain amount , Any Mass bank can be used for security deposit you just tell the bank and they give you a form which needs tenants information since it's technically their money , we're just holding it for them.
Most important is they get their yearly interest from security deposit no matter how small as it could cause an issue if there's every any other problems with the tenants
Real Estate Investor · Boston, MA · Member since 2009 · 2k+ posts · 542 votes
12y
Hey @Dan Borecki good to meet you and Michelle in person Wednesay!
SecDep pretty covered above.
My 2cents I'm in Sovereign and the account name is:
"69 DeadEnd Avenue Tenant Escrow Account" (not a real address of mine;-)
I believe with that designation a Bank can't mess with you i.e. Check fees and minimum balances.
Make sure the check goes directly in the account, not cashed at their bank or deposited in another checking account. Also don't combine SecDeps from buildings. Judge cautioned me "...that much money is a great Plaintiff's target"
Involved In Real Estate · Everett, MA · Member since 2013 · 51 posts · 4 votes
12y
@Erie Springer Thanks for the BOA info. When you say tenants can deposit money, you're just referring to the monthly rent, correct? Can they do electronic wires to BOA and if so, do they charge a fee for that?
Involved In Real Estate · Everett, MA · Member since 2013 · 51 posts · 4 votes
12y
@Colleen F. Thank you, I will be certain to only deposit checks in MA. I had seen similar comments in other forum posts and that was what was a bit confusing to me. I'll be sure to only deposit in MA branches.
Involved In Real Estate · Everett, MA · Member since 2013 · 51 posts · 4 votes
12y
@Mike Hurney it was great to meet you too, looking forward to meeting up at future events!
Those are helpful tips, thank you for sharing.
Regarding the comment on checks going directly into the tenant designated account.... would it be OK if you deposit the last & security deposit checks to your own account and then transferred them once you have set up the account for the tenant within the 30 days of receiving the deposit?
@Erie Springer Thanks for the BOA info. When you say tenants can deposit money, you're just referring to the monthly rent, correct? Can they do electronic wires to BOA and if so, do they charge a fee for that?
Yes was referring to tenants can pay their rents that way
I'm not sure about the electronic wire , you would have the ask the bank
Real Estate Investor · Boston, MA · Member since 2009 · 2k+ posts · 542 votes
12y
@Dan Borecki No Security deposit must be deposited directly into the Tenant Escrow account!
Even if you get a check that's for both Rent and Security Deposit that must go directly into the Tenant Escrow account, then you can transfer rent to cash or your account!
Investor · Belmont, MA · Member since 2015 · 1 post · 2 votes
10y
Hey guys,
I know I'm a little late here, but I wanted to point out something no one else seems to have noted (or maybe I just missed it in the thread). Namely, that in addition to the account where the security is held, being a separate account just for this money, it needs to be "protected from creditors". What this means is that it needs to not be exclusively, or some would say, in any way, in the landlord's name.
Technically, the SD should be held in an escrow account. It will not satisfy the MGL requirement if it is simply held in another account in the Landlord's name. To satisfy the law you will need to open a new account and have it either be a joint account, or a proper escrow account to satisfy MGL.