Bank accounts for rent and security deposit

[Jay Lam]

Hello,

If I have two bank accounts one for the rent and for the security deposit, do these accounts have to be in both me and my wifes name if we both own the house? Or can the accounts just be in my name? Thank you!

[Teri Feeney Styers]

@Jay Lam in Colorado a licensed property manager has to hold security deposits in a trust account. Now you aren't that "official" - but you should think about how to protect your tenant if something should happen to you. Holding the security deposit in its own account is a very good practice; but also make sure that there is some sort of "continuation" for that account. Your wife as joint tenant (even though she isn't an active manager she can still sign a check if need be), a child or trusted relative as a designated beneficiary (so the bank knows what to do with the money). It can be a personal account; but for recordkeeping, IRS, etc. don't co-mingle other non-business funds. When I had my own rentals I had two accounts (a checking and a savings). The checking was where rent deposits were made and month to month expenses such as water bills were paid. The savings had the security deposits and monthly deposits for longer term items (cap ex) like a new appliance, or paint, or roof. I chose to put 10% of the gross rent in there.