Escrow Account for my Rental

[Bobbie Russell]

I just got a LTR tenant into my first investment property. I contacted my local banks about setting up an escrow account for the tenants security deposit but my local credit union and a national bank both told me they don't offer those.  In Florida it is required to hold the Security Deposit in a different account (escrow, I'd assume) from normal business.  

My question is, how are those investing in Florida handling the security deposit?  Do you just open a different checking account to hold the deposit or if you are doing an escrow account, how? 

Thanks

[Amber Stout]

Hi Bobbie, In FL, you don’t necessarily need a formal “escrow account” . The law just requires you to keep tenant deposits separate from your operating funds and to notify the tenant in writing where it’s being held also whether it’s interest bearing or noninterest bearing. 

Most small landlords here just open a separate checking or savings account in the property's LLC or their name and park the deposit there. That way, it's cleanly separated if you ever get audited or a tenant challenges it. When you set it up, make sure you send the tenant the required written notice within 30 days. I typically just have it in my lease so when they sign, it's already documented within the lease where the funds are being held.