Find out which states require security deposits to be held in escrow accounts, along with what types of escrow accounts must used and any holding requirements.
Many state also specify the types of escrow accounts that must be used, as well as other holding requirements. Also, local laws may have more stringent requirements than state laws. For example, landlords in Chicago are required by city ordinance to hold security deposits in an escrow account, but Illinois has no holding requirements.
Alaska Security Deposit Escrow Requirements
Security deposits in Alaska must be held in a trust account in a bank, savings and loan association, or licensed escrow agent. Prepaid rent and security deposits can be held in the same account, but they must be kept separate from the landlord’s own funds.
Colorado Security Deposit Escrow Requirements
In Colorado, if the rental unit is a mobile home, landlords must hold each security deposit in a separate trust account. The security deposit account must not be used to hold the landlord’s own funds.
If the rental unit is not a mobile home, landlords can choose where to hold the security deposits.
Connecticut Security Deposit Escrow Requirements
Landlords in Connecticut must hold security deposits in an escrow account in any financial institution located within Connecticut. Multiple security deposits can be held in the same account, but the account cannot be used to hold the landlord’s own funds.
Within 30 days after receipt of the security deposit, the landlord must provide the tenant with a written notice that includes the amount held in escrow and the name and address of the financial institution.
Delaware Security Deposit Escrow Requirements
Landlords in Delaware must hold security deposits in a federally-insured bank with an office in Delaware. Multiple security deposits can be held in the same account, but the account cannot be used to hold the landlord’s own funds.
Florida Security Deposit Escrow Requirements
Landlords in Florida must hold security deposits in one of three places: a non-interest-bearing account, an interest-bearing account, or by posting a surety bond.
The escrow account must be located within Florida and only used for security deposits. Landlords cannot mix their own funds in the same account.
If the landlord chooses to post a surety bond, it must be posted with the clerk of the circuit court in the county where the rental property is located and executed by a company that is licensed in Florida. The bond must be equal to the total amount of security deposits and prepaid rent held by the landlord or $50,000, whichever is less.
Georgia Security Deposit Escrow Requirements
Landlords in Georgia must either hold security deposits in an escrow account of any state or federally-regulated financial institution or post a surety bond.
If the landlord uses an escrow account, it must only be used for security deposits. Landlords cannot mix their own funds in the same account.
The landlord may instead post a surety bond issued by a company authorized to do business in Georgia and posted with the clerk of the Superior Court in the county where the property is located. The amount of the bond must be at least the total amount of all security deposits held by the landlord or $50,000, whichever is less.
Idaho Security Deposit Escrow Requirements
In Idaho, if the rental unit is managed by a third party, the security deposit must be held in a federally-insured financial institution and held separately from the third party’s operating account.
Iowa Security Deposit Escrow Requirements
Landlords in Iowa must hold security deposits in a trust account or federally-insured bank, credit union, or savings and loan association. Security deposits cannot be commingled with the landlord’s own funds.
Kansas Security Deposit Escrow Requirements
In Kansas, if the rental unit is a mobile home, landlords must hold security deposits in a federally-insured bank, credit union, savings and loan association, or trust account. Security deposits cannot be commingled with the landlord’s own funds.
If the rental unit is not a mobile home, landlords can choose where to hold the security deposits.
Kentucky Security Deposit Escrow Requirements
Security deposits in Kentucky must be held in an account of an agency of the United States government or a Kentucky bank or lending institution and may not be commingled with other funds. Tenants must be informed of the location of the financial institution and account number.
Maine Security Deposit Escrow Requirements
Landlords in Maine must hold security deposits in a bank or other financial institution. Security deposits cannot be commingled with the landlord’s own funds. If requested by the tenant, landlords must provide the account number and name of the financial institution.
Maryland Security Deposit Escrow Requirements
Within 30 days of accepting a deposit, landlords in Maryland must place security deposits in one of three places: an interest-bearing account, a certificate of deposit, or in state or federally-issued securities. Security deposits cannot be commingled with other funds, like rent.
However, if the rental unit is a mobile home, security deposits must be held in a bank or savings account within Maryland.
Massachusetts Security Deposit Escrow Requirements
Within 30 days of accepting a deposit, landlords in Massachusetts must place them in an interest-bearing bank account within Massachusetts and provide the tenant with a receipt that lists the name and location of the bank, account number, and amount.
Security deposits cannot be commingled with the landlord’s own funds and must be held in a way that protects the funds from the landlord’s creditors.
Michigan Security Deposit Escrow Requirements
Security deposits in Michigan must be held in a regulated financial institution or the landlord must post a cash or surety bond with the Secretary of State by a company licensed in Michigan.
Missouri Security Deposit Escrow Requirements
Landlords in Missouri must hold security deposits in a federally-insured bank, credit union, or other financial institution.
New Hampshire Security Deposit Escrow Requirements
Landlords in New Hampshire must hold security deposits in a bank, savings and loan association, credit union, or post a bond. Security deposits cannot be commingled with the landlord’s own funds.
If the landlord chooses to post a bond, it must be written by a company within the state and posted with the clerk of the city or town where the rental unit is located.
If security deposits are held in a financial account, landlords must provide a receipt upon request that includes the name of the financial institution, amount, account number, and interest rate.
New Jersey Security Deposit Escrow Requirements
Landlords in New Jersey that collect 10 or more security deposits must hold them in a federally-insured interest-bearing account or invest in shares of an insured money market fund.
Landlords holding 9 or fewer deposits must hold them in any federally-insured interest-bearing account within New Jersey.
New York Security Deposit Escrow Requirements
In New York, if the rental property has 6 or more units, security deposits must be held separately from the landlord’s own funds in an interest-bearing account in any bank within New York. Landlords must notify tenants in writing of the name and address of the financial institution where the security deposit is held.
If the rental property consists of 5 or fewer units, the landlord may choose where to hold the security deposits as long as they are not commingled with other funds.
North Carolina Security Deposit Escrow Requirements
Landlords in North Carolina must hold security deposits in a licensed and state or federally-insured trust account or post a surety bond with an insurance company licensed to do business in North Carolina.
If the security deposit is held in an out-of-state trust account, the landlord must also provide the tenant with a bond in the amount of the deposit.
North Dakota Security Deposit Escrow Requirements
Landlords in North Dakota must hold security deposits in a federally-insured, interest-bearing checking or savings account.
Oklahoma Security Deposit Escrow Requirements
Landlords in Oklahoma must hold security deposits in any federally-insured financial institution within Oklahoma. Security deposits cannot be commingled with the landlord’s own funds.
Pennsylvania Security Deposit Escrow Requirements
In Pennsylvania, security deposits greater than $100 must be held in a bank or other financial institution or the landlord may secure a bond from a surety authorized in Pennsylvania.
The financial institution must be regulated by the Federal Reserve Board, Federal Home Loan Bank Board, Comptroller of the Currency, or the Pennsylvania Department of Banking. The landlord must notify the tenant in writing of the name and address of the bank or institution and the amount deposited.
Tennessee Security Deposit Escrow Requirements
Security deposits in Tennessee must be held in a state or federally-regulated financial institution. The deposits cannot be mixed with the landlord’s own funds. When the lease is signed and the security deposit is collected the landlord must notify the tenant in writing of the location of the financial institution.
Washington Security Deposit Escrow Requirements
Landlords in Washington must hold security deposits in a bank and trust company, savings bank, savings and loan association, or credit union. Alternatively, landlords can hold the deposits with a licensed escrow agent within the state or in a trust account used only for security deposits.
Landlords must provide tenants with a written notice of the name and address of the financial institution.
Washington D.C. Security Deposit Escrow Requirements
Security deposits in Washington D.C. must be held in an interest-bearing escrow account in a financial institution within Washington D.C. insured by a federal or state agency. The deposits cannot be commingled with the landlord’s own funds.
