I've heard that landlords have to pay interest on a security deposit in some states. Is this true? Is there somewhere to find out which states this applies to?
Check your state's landlord-tenant law
In Maryland, Security deposit earns 3 or 5% (forgot exact number) annual simple interest paid semi-annually
Old topic, relevant question I found doing a search.
It's 3%. A savings account only pays less than 1%. Are we supposed to come up with the other 2% out of pocket?
Here, landlords are required to turn security deposits over to the Rentalsman (provincial government agency) which holds them in-trust, but retains the interest to fund operations.
Yes you are resposible for the out of pocket interest. They really need to update the rates.
You need to check out local and state laws. If I remember correctly., Illinois, only complexes containing 25 or more units are required to pay interest. In addition, state law does not require accounting for deposits for landlords with less than 5 rentals.
|INTEREST ON THE SECURITY DEPOSIT - ILLINOIS|
Only if a building contains 25 or more residential units, the landlord must also pay interest on the deposit from the date it was paid, if held more than 6 months. (Interest is calculated at the rate paid by the largest bank in Illinois, as determined by total assets, on a passbook security account.)
There is no restriction on the amount of the security deposit for the rental of a commercial property.
Assuming your rentals are in Alabama, the law there is:
Alabama SECURITY DEPOSIT
Limit: no more than one month's rent unless an additional fee is required for pets.
Termination of Lease: Money held by the landlord as security may be applied to the payment of accrued rent and the damages that the landlord has suffered by reason of noncompliance with the tenant's obligations under the Act.
Failure to Return: If the landlord does not refund the entire deposit, the landlord, within 35 days after termination of the tenancy, must provide the tenant with an itemized list of amounts withheld. If the landlord fails to mail a timely refund or accounting within the 35 day period, the landlord must pay the tenant double the amount of the deposit;
Damages: While the Alabama Landlord is required to keep the unit in a safe and habitable condition, the Alabama Tenant is required to maintain the unit they live in - not to damage the unit and to immediately notify the landlord of any problems and to provide access for emergency repairs.
When you move out of a unit, it should be returned in the same condition, less normal wear and tear. The tenant may be charged for damages NOT considered normal wear and tear.
Basic rental laws for other areas can be found Alabama SECURITY DEPOSIT
Mine will be in Maryland so I looked up the local information found here, that's where I got the 3% from and became confused.
Return of the Deposit to Tenant; Interest
The landlord must, within 45 days after the end of the tenancy, return to tenant the security deposit minus any amount which the landlord may rightfully withhold. Simple interest of 3% per year must be paid on security deposits of $50 or more and must accrue at 6 month intervals from the day the security deposit was given. Interest is not compounded. If the landlord, without a reasonable basis, fails to return any part of the security deposit within 45 days after the termination of the tenancy, the landlord may be liable to the tenant for three times the withheld amount, plus reasonable attorney’s fees.
I realize that 3% on $2,000 is only $60, but still seems odd that I am held to make up for the difference in interest on a law that was written probably back when ING Direct was giving 5% interest on a savings account. (Guessing)