For the state of Massachusetts, how do you set up an Escrow Account to place the secuirty deposit of a tenant?

Question

I have an apartment in Boston I'm renting for the first time. My tenant just sent me a check for the security deposit. I've heard this should be placed in an Escrow Account. Where should I open one and what name should be on the account? How does it work? Thanks!!!

Answer 1

Go to your bank and open an account.

"Apartments Name", Escrow. Any interest will be yours.
You will be the owner in your name. You may not need many checks unless or untill you have a large turnover of tenants.

Answer 2

Your local bank will know the specifics of setting up the account, what to name it, and how to handle it. What you must know is what is required by Massachusetts Law, namely:
* If you collect a security deposit, it must be held in escrow in a Massachusetts bank.
* A receipt must be given to the tenant immediately
* Within 30 days, a notice must be given identifying the bank and account number where the deposit is being held
* If the deposit is not held in a Massachusetts bank, the landlord is subject to a claim for three times the deposit
* Where the security deposit is held longer than 12 months, interest is due at the rate of 5 percent or the actual amount earned, whichever is less.

Good luck!

Answer 3

As a first time landlord, I would recommend the various books on the subject and read and reread. Personally, besides a security deposit account which may be required in Mass., I would maintain a seperate rental account anyway. It makes it a lot easier to maintain the records then comingling it with your personal funds. You are going to need most of it to pay the bills and upkeep anyway. I would suggest maintaining at least a $2000 repair fund before taking out any profits. I strongly recommend keeping the place in good repair to begin with. It is a lot easier and cost effective to keep the place in good repair then to have to respond to "emergency repairs" at 2 a.m. Insist that your tenent notify you when something isn't right and get it fixed as soon as possible.

That also goes a long way to keeping "good" tenents but having a good working relationship has to be mutual. Some tips: don't insist on rent on the first of the month. I wait until at least the 10th or 15th. Most people have trouble meeting all of the obligations on the 1st and thus you tend to get the rent late anyway. By scheduling it on the 10th or the 15th, you take some of the burden off. Just an idea that has worked for me. I want to keep good tenents for as long as possible. I also make extra revenue leasing furniture and appliances to the tenents. I will supply them with whatever they need, charge a premium, then allow them to keep the items if they stay for whatever period. Most people don't have referigerators or washers and dryers. I pick them up cheap and allow them to keep them after at least 18 months. If they move before hand. I keep the appliance and do the same thing for the next tenent using the same appliance!

Never and I mean never, offer to apply the security deposit to the rent. It is illegal in some states to do and is just not good practice. Insist on collecting the last month's payment, then after they move out promptly return the deposit if the apartment is in order. Otherwise, more often than not you are going to get stuck with some damage and not be able to collect.

Answer 4

you can open an escrow account at your bank and can even specifically call it escrow...when you collect your payments monthly you should have whatever portion designated for that account deposited there...for instance lets say the monthly rent is going to be $900.00 a month.
If your tenant is going to be paying the payments for insurance and property taxes then this cost should be included in the payment, say its another 200.00 monthly for a combined payment of $1100.00...the $200 should go to the escrow acct monthly....when the bill comes due for these payments then you will make the payments from this account...remember that insurance is paid in advance and taxes are paid in arrears

Answer 5

It should be in a non interest bearing account since any interest accrued must be paid out to the tenant when the lease terminates...you can open an escrow account with your local branch.....