I need to open an escrow account to keep my tenants' security deposit. So far I have stopped by 2 different banks to inquire about escrow account, both of which told me that I could just set up a checking account for this purpose and call it an escrow account. What they weren't able to answer is this: can I open up an interest bearing savings account and call it an escrow account? Ideally I would like open an online savings account such as Barclays or Ally online saving account for this purpose. I appreciate your input on this.
Georgia's law regarding security deposit is following:
What is the landlord required to do with the security deposit?
Under Georgia law, a landlord who owns more than ten (10) rental units, including units owned by their spouse and/or children, or who employs a management agent is required to place the security deposit in a bank escrow account, used only for security deposit funds. The landlord must give the tenant written notice of the location where the security deposit is held but is not required to disclose the account number. As a substitute for having an escrow account, the landlord may post a bond with the superior court clerk of the county in which the rental property is located.
Don't believe the people at those 2 banks. They don't know what they are talking about. I had this exact same problem when I tried to open a security deposit account. The bank told me the same thing. I tried to explain to them that I can't just open a regular checking account and call it an escrow account. It needs to be a special kind of account that is protected in case I get sued, because it is not my money. It belongs to the tenants. They didn't get it. So, I moved on. Finally found someone at Citibank that knew exactly what I was talking about, set up the accounts I needed, and it has worked out great.
In California, we are not required to make accounts interest bearing, so I don't have one. I can't answer your question about that.
Be diligent and make sure they understand what you want. They may call it a trust account, escrow account, or security deposit account.
I would like to revive this thread.
Has any one succeed in opening a true escrow account in Georgia. I have a few clients who own and manage their own rentals and are having difficulty in opening a true escrow account. Thanks.
@Kazi R. It looks like the GA law is very similar to the NC law. Another thing to think about when it comes to interest bearing accounts is that you must inform your tenants that the money will be in an interest bearing account and that you will retain all interest earned. That statement will need to be in their contract.
@Bijal Patel I'm in NC, and I was able to open escrow accounts with Wells Fargo. I know WF is in GA too.
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