Tenant security deposit in separate savings account

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Brandon Arce
Member since 2019 · 14 posts · 13 votes
1y

A tenant took me to court for this issue, what i found out is that you can keep it in any account you wish but you have to notify the tenant (in writing) of the location and rates they will be accruing.

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  • Brandon Arce
    Member since 2019 · 14 posts · 13 votes
    1y

    A tenant took me to court for this issue, what i found out is that you can keep it in any account you wish but you have to notify the tenant (in writing) of the location and rates they will be accruing.

    2Reply
  • Andrew PostellPro Member
    Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
    1y

    @Arun Maheshwari good question.  @Kyle Mccaw any advice here?

    0Reply
    • Kyle MccawBusiness Member
      Property Manager · Keller, TX · Member since 2011 · 1k+ posts · 1k+ votes
      1y
      Quote from @Andrew Postell:

      @Arun Maheshwari good question.  @Kyle Mccaw any advice here?


      Every state has it's own rules. NJ is more strict than Texas. 

      As a Texas landlord or property manager, you can keep a tenant's security deposit in any account, including a separate savings account, as Texas law doesn't require a dedicated escrow or interest-bearing account. You must refund the deposit (or balance with an itemized deduction list) within 30 days of the tenant vacating and providing a written forwarding address.

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  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    1y

    I have never been asked anything about it.  In most of my career I ended up keeping it anyway. I recently had an inherited section 8 holder asking for their deposit back. I never received it, but had to pay only what they put in. I have to ask if the ones I have property managers for pay interests or how they handle it. 

    1Reply
  • Scott Nachitilo
    Property Manager · OK · Member since 2024 · 98 posts · 74 votes
    1y

    Hi Arun, dealing with security deposits can be tricky! As per my knowledge in New Jersey, you absolutely must put the tenant's security deposit into a dedicated, interest-bearing account. While it doesn't have to be labeled but you must notify the tenant in writing within 30 days about the bank name, address, account number, and amount deposited.

    Here in Oklahoma, laws often require an actual escrow designation, a separate savings account in your name, solely for holding that deposit.

    I recommend always double-checking the latest NJ statutes for any updates!

    1Reply
  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    1y

    Must be specific tenant escrow account, collect W9 from tenant.  You also must disclosure to tenant what bank money will be held in.  If you call your local bank they will be able to provide details.

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    • Sami Gren
      Rental Property Investor · NJ · Member since 2019 · 442 posts · 40 votes
      9mo
      Quote from @Shawn Mcenteer:

      Must be specific tenant escrow account, collect W9 from tenant.  You also must disclosure to tenant what bank money will be held in.  If you call your local bank they will be able to provide details.

       you need a w9?

      0Reply
  • Bogdan "Dan" Protas
    Rental Property Investor · Member since 2024 · 1 post · 1 vote
    1y

    yes, very easy to open landlord/tenant account, just put the money there and that will save you a lot of headache. 

    1Reply
  • Adam BartomeoBusiness Member
    Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
    1y

    In FL the security deposit has to be kept in an escrow account, in the state, and if it is interest bearing the tenant gets 75% of the interest.

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  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    9mo

    @Sami Gren speak with the bank you are open account at.  I am yet to open an account where it is not a requirement.

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  • Henry T.
    Member since 2022 · 1k+ posts · 1k+ votes
    9mo

    Separate account. Cannot be co-mingled. Tell the tenant which bank it's at, that's all.  Typical Chase account pays about .000001 percent interest.  or, about 2 cents a year on $1500 deposit.  Watch out the tenant doesn't call you out for profiting off of their deposit.  You evil greedy landlords you! (eye roll)

    1Reply
    • Sami Gren
      Rental Property Investor · NJ · Member since 2019 · 442 posts · 40 votes
      9mo
      Quote from @Henry T.:

      Separate account. Cannot be co-mingled. Tell the tenant which bank it's at, that's all.  Typical Chase account pays about .000001 percent interest.  or, about 2 cents a year on $1500 deposit.  Watch out the tenant doesn't call you out for profiting off of their deposit.  You evil greedy landlords you! (eye roll)

       Lol @Henry T. I think in NJ the law is that you need to give 3% regardless of the interest you are getting from the bank, as far as I know

      1Reply
    • Henry T.
      Member since 2022 · 1k+ posts · 1k+ votes
      9mo
      Quote from @Sami Gren:
      Quote from @Henry T.:

      Separate account. Cannot be co-mingled. Tell the tenant which bank it's at, that's all.  Typical Chase account pays about .000001 percent interest.  or, about 2 cents a year on $1500 deposit.  Watch out the tenant doesn't call you out for profiting off of their deposit.  You evil greedy landlords you! (eye roll)

       Lol @Henry T. I think in NJ the law is that you need to give 3% regardless of the interest you are getting from the bank, as far as I know


       Thanks Sami. Mandatory 3 percent?  Ridiculous.  F NJ  ;)   

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