Landlords- security deposit

Our tenant wants us to:
"security should be deposited into a interest bearing account (certificate of deposit). Upon termination of lease, deposit + interest will be returned less expenses..."

Is this typical? Don't you usually just get back your security deposit and not interest earned on it?

TIA!

Re: Landlords- security deposit

I am pretty sure it is NY law that the security deposit must be held in an interest-bearing account. When we've had tenants move out after 3 years, the interest is only like $4 or so.

Re: Landlords- security deposit

Oops...I was wrong, unless your house has 6 or more rental units, you are not required to hold the deposit in a separate acct:

http://www.rentlaw.com/dep/nydeposit.htm

Re: Landlords- security deposit

Interest on these account is usually a few dollars. Literally, like $3 a year, if that. So it's not a huge deal.

Re: Landlords- security deposit

Yes that's typical.

Re: Landlords- security deposit

You don't have to give them the interest that is earned on the security deposit. I rent my co-op in Queens and I use a lease from The Real Estate Board of New York, which says the security account shall not bear interest.

I never got interest from my security when I rented in the city.

Re: Landlords- security deposit

if this is a apt in your house then no it is not included in the provision requiring interest bearing accts. This provision is meant for apt buildings

also if you had to give interest you would have to open a separate acct because you would not be able to co-mingle the security deposit with your open money

Message edited 9/3/2009 4:35:24 PM.