How to set up a tennent Escrow account?

Question

I have just found a tenant for my single family investment property in NJ. How best do I go about opening an account to hold their security deposit? An escrow account or a trust account? Is this something I can get done by simply going to my local bank branch?

Thanks,

Tom

Thanks,

Tom

Vincent Paventa · Answer

Does anyone have guidance on what to do if the tenant will not complete the forms needed by the bank to set up the new sub-account? I inherited tenants on a new property and have a couple tenants who have not provided this after following up a couple times, so I can't set up the bank accounts. Chase Bank has a few forms required.

Carolyn Fuller · Answer

@Peter T.

re: Honestly, the biggest PITA about this process is the bank employee starring at you blankly when you ask them to do this and having to wait 45 minutes for them to open up the account (when it should probably take 5 minutes).

That was my experience at our bank but I now use TD Bank for all my escrow accounts and it takes 5 minutes. They never stare at me blankly!

Peter Tverdov · Answer

Tom, my company manages property in Central NJ. This is what we have all of our clients do:

-Get an ID of the tenant

-Have the tenant fill out a W9

-Bring deposit check to your local bank and open up a security deposit tenant account.

That's all you need to do. Do not do anything else other than that or you're at risk of doing it incorrectly.

Honestly, the biggest PITA about this process is the bank employee starring at you blankly when you ask them to do this and having to wait 45 minutes for them to open up the account (when it should probably take 5 minutes).

Carolyn Fuller · Answer

@Tom Coakley First I would become familiar with the NJ security deposit law:

https://www.thebalancesmb.com/...

My state requires very specific kinds of initial paperwork be given to the tenant. Don't know if NJ does or not.

I found that not all banks do escrow accounts with the same amount of ease. Our lawyer recommended TD Bank and I have found opening escrow accounts with TD Bank to be super easy.

I have our tenants fill out a W9 and send me their birthdate if it is not on their application. If the tenant does not have an SSN, I have them fill out a W8. I take the W9 or W8 and the tenant's birthdate to a TD Bank branch along with my photo ID. It takes me 5 minutes to open an account.

Matt Hanson · Answer

Tom – The simplest way possible is to open a bank account (checking or savings based on what your lease says) at your local bank. While it may take 15-30 minutes to setup, our bank sends us statements for each tenant and labels the account BUSINESS NAME – TENANT LAST NAME. It makes it so simple to keep track of things. I hope that helps.