Real Estate Agent · South Orange, NJ · Member since 2014 · 26 posts · 5 votes
I just purchased my first multi family on 9/12 which came with a tenant who will be moving out on 10/1. I was cut a check for the tenants deposit. I know that by law I am required to put the money in an interest barring account but considering
my tenant is moving out in 10 days, is this still required?
Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
12y
Yes. You should put the check in an interest bearing account if that is what the law in your jurisdiction requires. You do not know at this point how much of the tenant's security deposit you will return until you have possession of the unit and have have done your final inspection. The security deposit that was transferred to you upon purchase of the property is still for you to use for unpaid utility bills, damages, etc. Hopefully upon transfer of the property you also obtained the tenant's original move-in check list. You will have a certain number of days after the tenant moves out to calculate the final report for return of the security deposit. Use the time well. Don't let the tenant pressure you into giving them back their deposit at the time they move out.
Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
12y
Yes. You should put the check in an interest bearing account if that is what the law in your jurisdiction requires. You do not know at this point how much of the tenant's security deposit you will return until you have possession of the unit and have have done your final inspection. The security deposit that was transferred to you upon purchase of the property is still for you to use for unpaid utility bills, damages, etc. Hopefully upon transfer of the property you also obtained the tenant's original move-in check list. You will have a certain number of days after the tenant moves out to calculate the final report for return of the security deposit. Use the time well. Don't let the tenant pressure you into giving them back their deposit at the time they move out.
Clinton, MD · Member since 2014 · 50 posts · 20 votes
12y
Ditto on giving the deposit back on move out. I did a move out inspection with a tenant once and gave him a check on the spot. A fee days later I saw the side of the stucco garage where he left a car transmission laying there that punctured a hole in the side of the wall. Not happy. But my fault for giving back the deposit too early.
Property Manager · Gilbert, AZ · Member since 2009 · 1k+ posts · 451 votes
12y
Another reason that you do want to deposit the funds is if anything goes bad with the tenant moving out you will need a paper trail to verify the proper handling of their funds.