All Forum Posts by: Brian Adams

The Texas Association of Realtors lease is the most common residential lease used throughout Texas.

http://www.pdffiller.com/100034432-2001-Final-Fillable-Residential-Lease---Texas-Association-of-Realtors-User-Forms

If the link doesn't work - just google TAR Residential Lease.

Only members of TAR (Realtors) are authorized to use the lease, but it is probably a great starting point and resource to get you going in the right direction.

I understand most States may be beholden to those rules, but Texas is not. There are no requirements for security deposits to be in escrow or any other restrictions on their use, as long as they are accounted for and returned, when applicable, at the end of the lease.

TEX Prop. Code Sec. 92.101-109

and

http://www.nolo.com/legal-encyclopedia/texas-security-deposits-36234.html

and

http://texastenant.org/security_deposit.html

It seems to me in a "stacking nickels" business as I've seen it described, any small amount would help to improve a profit margin. I was just casually considering what a midsized property management business must have on hand in an security deposit account, and it is a huge sum of money. Security deposits add up quickly.

I realize it is other people's money, but so are bank deposits. But banks only keep a small fraction of the deposits on hand, and survive as a company by investing the rest (or at least that is how it used to work, once upon a time). Perhaps it is different because of FDIC insurance and so forth, but nevertheless, it is an industry that has made its living intelligently managing deposits in exactly the same manner.

If a property manager could conservatively improve their return by just a percentage or two, it could easily amount to thousands of dollars of revenue that could help improve a business margin.

Again - no idea what the laws are for other states or what proportion require specific accounting for the security deposit. This may just apply to Texans.

Hello BPers. This is my first post. I have been looking tirelessly for good forums with some real life lessons on landlording/property management straight from the trenches, and this has been the best site I've found thus far.

My question is: what do property managers do with the security deposits? It seems to me that, like a bank, only a fraction needs to be kept on hand for paying either for repairs, unpaid rents, or returning at the end of the lease. I assume management companies invest some portion of these funds. In what manner, and what proportion? Just an interest bearing savings account, or do managers get a little more creative? I am from Texas where there are no regulations that I know of that requires for the landlord to pay interest, safeguard, or other otherwise account for these funds during the term of the lease.

Thank you very much.