Yes to all of the above. I keep mine in its own bank account. Far as I know that is all that is required. It is 3% simple per year. And yes, out of our pockets.
Thank you for the reply. I believe that Maryland requires an "escrow" account to hold security deposits, which I imagine is so that it's kept safe from you or your business' personal creditors in the event you go belly up. I walked around to some of the local branches of national banks but none of them seemed to have or want to do escrow accounts. I was hoping someone had a suggestion on a good bank or other financial institution to use that was easy o setup escrow accounts with.
I'm not from Maryland, but I found that 3% rate hard to swallow.
I looked up Maryland's statutes and found this in section 8-203 e (1) (i)
Within 45 days after the end of the tenancy, the landlord shall return the security deposit to the tenant together with simple interest which has accrued at the daily U.S. Treasury yield curve rate for 1 year, as of the first business day of each year, or 1.5%, whichever is greater, less any damages rightfully withheld.
(ii) For any year in which the landlord has held the security deposit for less than the full year, the landlord shall pay an amount of interest calculated by:
1. Multiplying the amount of the deposit by the daily U.S. Treasury yield curve rate for 1 year that was in effect as of the first business day of that calendar year, or 1.5%, whichever is greater; and
2. Multiplying the result obtained under item 1 of this subparagraph by a fraction, the numerator of which is the number of months that the deposit was held that year and the denominator of which is 12.
So basically (correct me if I'm wrong) it looks like your interest rate is tied to the U.S Treasury yield curve rate or 1.5% (whichever is greater)
Chin - Did you find a suitable bank to hold your security deposits in escrow in Maryland? I'm now trying to find a bank too.
@Chin P. I have all my security deposits at Capital One...also where I do all my banking. I find it easier to have all my accounts (Not including brokerage) at the same place. You use to have to pay 3%, but they actually lowered the amount of interest you have to pay on the deposit. I forget the exact amount..as I think it might be two different possible amounts, one of which is pegged to the treasury bill. You do have to make up the difference though, but we are not talking about a large sum of money.
I just keep them in a separate account. I have to pay the interest out of pocket anyway so not sure that an interest bearing account is necessary.
Here is a calculator so you know exactly how much interest to give back:
Originally posted by @Chin P. :
You're right Tony. The interest must have been recently updated from the last time I checked. The interest rate seems to have been updated a few times and depends upon when the tenancy started. From the MD Attorney General's office:
"The landlord must put the security deposit in an escrow account. When returning security deposits of $50 or more, the landlord must include simple interest of 3 percent per year, ac-crued at six-month intervals from the date the security deposit was paid for all tenancies that were initiated prior to January 1, 2015. For tenancies that began January 1, 2015 or later, the interest rate is payable at 1.5% OR the simple interest rate accrued at the daily U.S. Treasury yield curve rate for one year, as of the first business day of each year, whichever is greater. The Department of Housing and Community Development has a Rental Security Deposit Calculator on its website at www.dhcd.maryland.gov to make calculation of this interest rate easier. A landlord must pay 4 percent on deposits held before Oct. 1, 2004."
I found this post and I see it's a few months old. It's about time MD changed the % rate.