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Jan242012
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Tuesday, January 24, 2012 at 4:09PM by Banking Spectrum
Lease Security Accounts
A lease security account is a statutory creation intended to hold deposits of rent security in escrow for the protection of landlords and tenants. In New York, the rule pertains to property rentals in a building with six or more family dwelling units and in New Jersey, the rule applies to landlords with 10 rental units or more.
In accordance with N.J.S.A. 46:8-19, a New Jersey landlord is no longer entitled to receive, as administration expenses, 1% interest on the balance in the account. The interest paid on the deposit amount belongs to the tenant.
According to the New York General Obligations Law Section 7-103, a lease security deposit must be placed at a New York banking organization in an interest bearing account, with the first 1% of interest earned on the account remitted to the landlord. The balance of the interest may be paid to the tenant or given as a credit against rent. The law states that the lease security deposit (usually 1 or 2 months of rent on a residential lease) must be placed in a “prevailing rate” account.
A lease security account is a statutory creation intended to hold deposits of rent security in escrow for the protection of landlords and tenants. In New York, the rule pertains to property rentals in a building with six or more family dwelling units and in New Jersey, the rule applies to landlords with 10 rental units or more.
In accordance with N.J.S.A. 46:8-19, a New Jersey landlord is no longer entitled to receive, as administration expenses, 1% interest on the balance in the account. The interest paid on the deposit amount belongs to the tenant.
According to the New York General Obligations Law Section 7-103, a lease security deposit must be placed at a New York banking organization in an interest bearing account, with the first 1% of interest earned on the account remitted to the landlord. The balance of the interest may be paid to the tenant or given as a credit against rent. The law states that the lease security deposit (usually 1 or 2 months of rent on a residential lease) must be placed in a “prevailing rate” account.
- But what if your non-CD accounts are paying 1% or less? Does this mean the landlord gets all the interest on the account?
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