We recently rented our 2 bedroom unit to new tenants in Massachusetts; they are boyfriend and girlfriend. I went to set up the Security Deposit account with my wife and I as the custodian and them as the owners, and I hit a little roadblock.
The bank only allowed 1 custodian and 1 owner. They said these were their internal rules and I got confirmation from multiple people in the bank. Wasn't a huge issue for my wife and I as we share finances and I manage the property, but I'm unsure of the implications for the tenants. The tenants gave me the okay that they were fine with only 1 of them on the account, but I'm a bit un-easy that I may be screwing with the very strict MA rules surrounding Security Deposit Account.
I ended up setting up a single account with 100% of the security deposit in it. I'm the sole custodian, only one of the tenants is the owner.
Basic question: Is it okay that the Security Deposit is only in one of the tenant's names? Should I try to find a new bank that can do a joint account? Should I do 50% in one of their names, and 50% in the other?
The security deposit goes with the lease/property not with the individuals that are on the lease. It's up to them to make sure it is divided correctly, not you. You should be fine with the account you have set up.
When the time comes to cut them a check, put both names on it if both names are on the lease.
Your state requires you set up a bank account for each deposit? I’m guess if you have enough units you don’t have to do this?
Did I understand you correctly? Did you set up a bank account that the tenant has access to?
Your only requirement is to disclose the name and location of the institution holding the funds and (I think) your state requires you to provide a copy of the deposit receipt.
The tenant should not be named on the account, know the account #, or have access to the account. If they do then I recommend you fix it right away.
I have over $300,000 in deposits for around 300 different rentals. Not one tenant is named on that account, knows the account number, or could ever access it. They know the bank name and address, nothing more.
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