[vickster]

Hello,
I need to know if it is a PA state law that a landlord deposits your security deposit into an interest bearing bank account?
I asked my landlord about depositing my security ($750.00) into a bank account and he told me that he opted not to do that and that he used my security money on other things. I am starting my third year lease and I would like the facts before I confront him again on this issue. Any help would be greatly appreciated.
Vickie

[ScottGem]

At the top of this forum is a "sticky" post that has links to applicable laws in various areas.

A quick perusal of that found this:

http://members.aol.com/StatutesPA/68PA250.511b.html

Seems your landlord is in trouble.

[brooks]

Your landlord is right, he can opt not to pay you interest on the deposit for the first two years. He is required to put any SD over 100.00 in an interest bearing account at the beginning of the third year and give you the interest accrued minus 1% at the end of the third year.

[ScottGem]

According to the statute cited, Any security depoit in excess of $100 needs to be "deposited in an escrow account of an institution regulated by the Federal Reserve Board, the Federal Home Loan Bank Board, Comptroller of the Currency, or the Pennsylvania Department of Banking". The account does not have to be interest bearing (the point that I missed), but it does have to be deposited. For your landlord to not only NOT deposit the funcds, but to actually use them certainly seems to violate the letter and spirit of the statute cited.

[brooks]

Amount of Security Deposits. Pennsylvania law regulates the amount of money a landlord may collect as a security deposit. Sometimes landlords will collect more money from you by requiring that you pay the first month's rent, the last month's rent, or both, in advance, as well as giving them a security deposit.
According to Pennsylvania law:
During the first year of the lease, the landlord can charge no more than two month's rent as a security deposit.
During the second year of the lease, the landlord can charge no more than one month's rent as a security deposit. Any amount in excess of one month's rent must be returned to you.
During the third year of the lease, if your security deposit is over $100, the landlord must deposit it into an interest-bearing bank account and must inform you of the name and address of the bank where the account is located. At the end of the third year, the landlord must give you the interest earned on the account, minus a 1% handling charge.
http://www.cmu.edu/policies/Landlord...t/security.htm

http://www.clsphila.org/housing-security_deposits.htm

[ScottGem]

Ok, I went back over this and I see now what you are seeing. Section 250.511b. Is entitled Interest On Escrow Funds Held More Than Two Years. Therefore, it would appear that it refers only when the lease has exceeded two years. Like many laws, this one seem to have been written pretty poorly.

The spirit of the law seems to be that funds over $100 must be deposited in an approved escrow account. But the letter of the statute can be interpreted that this only has to be done after two years.

However, since Vickie stated that she is now entering her third year on the lease, the landlord would be required to now place the deposit into an interest bearing account.