Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
The law in my state is vague. It says you must create a separate account for the security deposit, and you can't mingle it with your own money.
I was thinking of creating one bank account for the security accounts of all properties, rather than try to create a separate account for each deposit. Does anyone do this?
This means you must have a sec dep account. It does not mean to have a separate account for each rental unit. For example, we have over 30 units, does the law expect us to have 30 accounts with anywhere from $450 to $750 in each - of course not.
It DOES mean that this can not be your checking account or tax escrow account and MUST be its own Sec Dep account. In fact, our bank allows us to put 'labels' on each checking or savings account. We have actually called that savings account "Security Deposit Savings"
This means you must have a sec dep account. It does not mean to have a separate account for each rental unit. For example, we have over 30 units, does the law expect us to have 30 accounts with anywhere from $450 to $750 in each - of course not.
It DOES mean that this can not be your checking account or tax escrow account and MUST be its own Sec Dep account. In fact, our bank allows us to put 'labels' on each checking or savings account. We have actually called that savings account "Security Deposit Savings"
In PA the law also speaks to interest, which is also pretty common throughout the states. PA allows the landlord to keep a small percentage (Something like the first 2%) and all other interest must be remitted to the tenant each year. Since most savings accounts are giving .25% to 1%, there is no need to remit any interest payment to tenants.
IMHO, the paperwork involved and the tracking (logistics) is more trouble than it is worth. For example, 2% of $550 sec dep is $11.00 a year minus hard expenses (like stamps, envelopes, ink) minus time. It is a very unprofitable task.
I actually prefer the lower interest rate scenario (not determined by us, but by the market) so that the whole side of legal compliance is negated.
All the more reason to network with people in your area who know the state-specific statutes, Bienes.
Every couple of years I'll google state apartment associations or rental sites to read their sample leases. If a clause looks pertinent I'll add it to mine (changing the wording so it isn't plagiarism).
I recently read one local lease that cited the reference number of every pertinent state statute. Don't know if they were trying to 'assist' the magistrate if things ended up in court, trying to subtly intimidate the tenant, or hoping to look 'knowledgy'.
Thanks. We have no requirment to pay interest on the deposit here. I found out that most people in this state don't even bother to keep the separate account at all, but I plan to do it anyway. But not a separate account for each property.