Real Estate Investor · Bristol County, MA · Member since 2010 · 153 posts · 37 votes
Hi,
I have a few questions for landlords in Mass; I've received some conflicting information from people in the area.
I was on the mass.gov website reading about the security deposit rules. It says that the landlord must keep the security deposits in a "separate" interest bearing account from a Massachusetts bank. Does that mean you need to have a separate bank account for each tenant to hold their security deposits? I assume that is so, but want to clarify.
Or, if you have a multi-family, can the security deposits be on one bank account or do they also need to be all in separate bank accounts?
Lastly, for those that hold properties in LLCs, do you have a separate checking/ bank account for each property in that LLC (to pay the rental property expenses and collect rent) or do you keep a separate bank account for each property on its own?
Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
15y
In Washington state a trust account just means setting aside these funds in a separate bank account. In other words individual trust accounts are not necessary here. Not sure how that applies in MA.
It is also required that a receipt be given for the deposit collected and the bank with location are identified.
Commercial Real Estate Agent · Western, MA · Member since 2010 · 36 posts · 7 votes
15y
If I heard it correctly during the MA license classes, you don't need a seperate account for each deposit. As long as the deposits are not mixed in with your personal funds, you only need one account for all the deposits. It's probably best to keep a spread sheet of each deposit, also.
Real Estate Investor · Reading, MA · Member since 2008 · 124 posts · 15 votes
15y
I have got conflicting advice on this matter, however at the last REIA meeting it was suggested that you can co-mingle security deposits, however when I read the mass law i take it as you must establish separate accounts for each deposit...
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
15y
Some banks have an account structure that handles this. You have one master escrow account, and then there are sub-accounts for each tenant. Ask around with your area banks to see whether they offer something similar to what I described (I'm in PA, we have that in PA). This is similar to what attorneys have to do with settlements that are received.
Investor · Tewksbury, MA · Member since 2010 · 59 posts · 17 votes
15y
Mass security deposits must be deposited into a seperate interest earning account in the state and the tenant must be named as the beneficiary.
I open all my SD accounts at BOA. Ask for an escrow account, most of the time the clerk won't know what you are talking about, tell them "like the realtors use". You'll need your tenants SSN when opening the account.
The tenant must be provided with the bank's information and account #.