Money
Security deposit interest and holding rules by state
The rule in every state and DC, with the statute and how well each answer is verified. Click a state for its full page.
Some states require landlords to keep deposits in a separate account, sometimes in an in-state bank, and some require interest to be paid to the tenant. For a licensed property manager, the state's trust account rules also apply to deposits held for owners.
What to check in your state
- Whether deposits must sit in a separate or trust account, and in which bank.
- Whether interest is owed, at what rate, and how often it must be paid or credited.
- Whether you must tell the tenant where the deposit is held.
Common mistakes
- Holding deposits in the operating account.
- Forgetting to transfer deposits and the account disclosure when management changes hands.
Related: Property Manager Trust Accounting Rules: What Regulators Audit · Taking over a portfolio from another manager
| State | Rule | Details | Sources |
|---|---|---|---|
| Alabama | No interest required. The landlord-tenant act sets no separate account rule. | The deposit statute does not require interest or a separate bank account. Licensed brokers who hold deposits for owners must follow Alabama Real Estate Commission trust account rules. | Ala. Code § 35-9A-201 Checked against the official source |
| Alaska | No interest required. Deposits go in a trust account where practicable. | Deposit prepaid rent and deposits promptly in a trust account at a bank, savings and loan, or licensed escrow agent. You may combine tenants' deposits in one account but must account for each tenant separately and never mix in other funds. Tell the tenant in writing the conditions for withholding. | AS 34.03.070(c) Checked against the official source |
| Arizona | No interest or separate account required for owners. | The deposit statute does not require interest. At move-in, give the tenant a signed lease copy, a move-in condition form, and written notice that they may attend the move-out inspection. Licensed property management firms must hold owner and tenant money in trust accounts. | A.R.S. §§ 33-1321(C), 32-2174 Checked against the official source |
| Arkansas | No interest or separate account required for owners. | Arkansas does not require interest on deposits. Licensed brokers who hold deposits for owners must follow Arkansas Real Estate Commission trust account rules. | Ark. Code Ann. § 18-16-301 et seq. Secondary source |
| California | No statewide interest or separate account rule for owners. | The deposit belongs to the tenant and ranks ahead of the landlord's creditors. On sale, transfer the deposit to the buyer and notify the tenant, or refund it. Several cities, including San Francisco, Los Angeles, and Santa Monica, require interest. Brokers holding deposits must use a trust account. | Cal. Civ. Code § 1950.5(d), (i) Checked against the official source |
| Colorado | No interest or separate account required for owners. | Colorado's deposit statute does not require interest or a separate account for owners. If a mailed refund comes back, hold it at least one year and pay the tenant within 15 calendar days of a request. Refunds may go by mail or, with consent, secured electronic transfer. Licensed brokers must keep others' money in a Colorado escrow or trust account. | C.R.S. § 38-12-103(9), (10) (HB25-1249); C.R.S. § 12-10-217(1)(i) Checked against the official source |
| Connecticut | Hold in an escrow account at a Connecticut financial institution. Pay interest yearly. 2026 rate: 0.49%. | Deposit the full amount immediately into an escrow account for the tenants' benefit. The Banking Commissioner sets the rate each year (0.52% for 2025). Pay or credit interest each year on the tenancy anniversary, and include accrued interest in the final refund. | Conn. Gen. Stat. § 47a-21(h), (i) Checked against the official source |
| Delaware | Hold deposits in an escrow account at a federally insured bank with an office in Delaware. No interest required. | The account must be used for security deposits, and the tenant's claim to the deposit has priority over the landlord's creditors. Not complying can expose the landlord to double the deposit. | 25 Del. C. § 5514(b) Checked against the official source |
| District of Columbia | Interest-bearing escrow account at a DC financial institution. Pay interest on tenancies of 12 months or more. | Interest accrues at no less than the statement savings rate, reset each January 1 and July 1. State the deposit terms in the lease or receipt. Post where deposits are held and the rates each year, and at move-out list the rate for each 6-month period. Federally subsidized units are excluded from the escrow rule. | 14 DCMR 308.3, 308.6 to 308.8; 14 DCMR 311 Checked against the official source |
| Florida | Hold in a separate Florida bank account, an interest-bearing account, or post a surety bond. Disclose within 30 days. | Interest-bearing accounts must pay the tenant at least 75% of the annualized average rate or 5% simple interest per year; a surety bond requires 5% interest. Within 30 days of receiving the deposit, give written notice of where and how it is held, using the statutory disclosure. | Fla. Stat. § 83.49(1), (2) Checked against the official source |
| Georgia | No interest required. Hold deposits in an escrow account used only for deposits, or post a surety bond. | The escrow account must be at a bank or lending institution regulated by Georgia or the federal government, and tenants must be told in writing where it is. A bond with the superior court clerk must equal the deposits held or $50,000, whichever is less. Give the tenant a signed move-in damage list before taking the deposit. A natural person whose family owns 10 or fewer units is exempt from these rules unless a third party manages the units for a fee. | O.C.G.A. §§ 44-7-31 to 44-7-33, 44-7-36 Checked against the official source |
| Hawaii | No interest required and no separate account required. | The landlord holds the deposit for the tenant, and the tenant's claim to it comes before the landlord's creditors, even if deposits are commingled. | HRS § 521-44(b) Checked against the official source |
| Idaho | No interest required. A third-party manager must keep deposits in a separate account at a federally insured institution. | The account must be separate from the manager's operating account. This rule does not apply to the owner, managers who share members or principals with the owner entity, real estate licensees, or certain nonprofits. | Idaho Code § 6-321(4) Checked against the official source |
| Illinois | Pay interest if the property has 25 or more units and you hold the deposit more than 6 months. | The rate is the passbook savings rate of the largest Illinois commercial bank as of December 31 before the lease starts. Within 30 days after each 12-month period, pay or credit interest of $5 or more, unless the tenant is in default, and pay all unpaid interest at move-out. Willful failure makes you liable for an amount equal to the deposit plus costs and attorney fees. The Act does not apply to public housing. Chicago requires interest on nearly all deposits. | 765 ILCS 715/1-3 Checked against the official source |
| Indiana | No interest and no separate account required by the deposit statute. | The landlord-tenant deposit chapter does not require interest or a specific account. If a licensed broker company holds deposits for owners, broker trust account rules apply. On a sale, the seller stays liable for the deposit for one year unless the buyer assumes it in a notice to the tenant and the seller transfers the money. | IC 32-31-3; IC 32-31-3-19; IC 25-34.1-4-5 Checked against the official source |
| Iowa | Hold deposits in a federally insured bank, savings and loan, or credit union; no mixing with personal funds. | Deposits may sit in a common trust account and may earn interest. Interest earned during the first five years of a tenancy belongs to the landlord. When you sell, transfer the deposit to the buyer and notify the tenant of the buyer's name and address, or return it. | Iowa Code 562A.12(2), (5), (6) Checked against the official source |
| Kansas | No interest or separate account required by the landlord-tenant act. | The act does not require interest or a specific account. Tenants may not apply the deposit to the last month's rent unless the lease allows it. Whoever holds the landlord's interest at the end of the tenancy is bound by the deposit rules. | K.S.A. 58-2550(d), (f) Checked against the official source |
| Kentucky | URLTA areas: separate bank account used only for deposits; tell the tenant its location and number. | Deposits must be held in an account used only for security deposits at a bank regulated by Kentucky or the federal government. Before taking the deposit, give a written list of existing damage with repair cost estimates for both parties to sign. The statute requires no interest. | KRS 383.580(1), (2), (4) Checked against the official source |
| Louisiana | No statewide statute requires interest or a separate account. | R.S. 9:3251 to 9:3254 contain no interest or account rule. When the property is sold during a lease, the deposit must be transferred to the buyer, who becomes responsible for returning it. Licensed brokers holding deposits for owners must follow Commission escrow rules. | La. R.S. 9:3251(B); 9:3251 to 9:3254 Checked against the official source |
| Maine | Hold in a bank account beyond the claims of the landlord's creditors; no interest requirement. | Deposits may not be commingled with the landlord's assets. One escrow account for all tenants is allowed. On request, tell the tenant the institution and account number. A violation costs the greater of actual damages, $500, or one month's rent, plus costs and possibly attorney fees. | 14 M.R.S. 6038 Checked against the official source |
| Maryland | Interest-bearing escrow account at a Maryland branch of a federally insured institution, within 30 days. | The account must hold only security deposits. Pay simple interest at the greater of 1.5 percent or the 1-year Treasury rate, accruing monthly, on deposits of $50 or more held at least 6 months. The deposit receipt must be in the lease and list the tenant's rights; failing to give a receipt costs $25. Keep receipts 2 years. | Md. Code, Real Prop. 8-203(c) to (e); 8-203.1 Checked against the official source |
| Massachusetts | Separate interest-bearing Massachusetts bank account; interest paid yearly. | Give a signed receipt when you take the deposit and a bank receipt within 30 days showing the bank name and address, account number, and amount. Pay interest each year at 5% or the lower rate the bank actually pays, and pay 5% interest on prepaid last month's rent. Keep deposit records for two years after the tenancy ends. Failing to hold the deposit properly entitles the tenant to its immediate return. | G.L. c. 186, § 15B(2), (3) Checked against the official source |
| Michigan | Regulated financial institution, or post a bond; no interest required. | Keep deposits in a regulated financial institution. You may use deposit money only if you file a cash or surety bond with the Secretary of State covering all deposits up to $50,000 plus 25% of any amount above that. State law does not require you to pay interest to the tenant. | MCL 554.604 Checked against the official source |
| Minnesota | 1% simple interest per year; no separate account required. | Deposits earn simple, noncompounded interest of 1% per year from the first day of the month after full payment. The landlord holds the deposit for the tenant, but it is not treated as money held in a fiduciary capacity under the real estate license law. When ownership changes, transfer or return the deposit within 60 days. | Minn. Stat. § 504B.178, subds. 2, 5 Checked against the official source |
| Mississippi | No interest or separate account required by statute. | The landlord holds the deposit for the tenant, and the tenant's claim to it comes ahead of the landlord's creditors. The statute does not require interest or a particular account. A licensed broker who holds tenant money for an owner must still use a trust or escrow account. Read on an unofficial copy; the official code (LexisNexis) was not accessible. | Miss. Code Ann. § 89-8-21(2) Secondary source |
| Missouri | Federally insured institution; interest belongs to the landlord. | Hold deposits in a bank, credit union, or depository insured by a federal agency. Any interest earned belongs to the landlord. Housing authorities and government landlords are exempt from the holding rule. | RSMo § 535.300.2 Checked against the official source |
| Montana | No interest or separate account required by the deposit statute. | We found no Montana requirement to pay interest on deposits or keep them in a particular account. Licensed property managers must still hold client and tenant funds in a trust account. | MCA Title 70, ch. 25; MCA 37-56-101(4) Secondary source |
| Nebraska | No statewide statute requiring interest or a separate account. | The deposit statute sets no interest or holding account rule. Whoever holds the landlord's interest when the tenancy ends is bound by the return rules, so pass deposits along on a sale. A licensed broker holding tenant money must still use a trust account. | Neb. Rev. Stat. §§ 76-1416(5), 81-885.21 Checked against the official source |
| Nevada | No interest or separate account required by NRS 118A. | Give a signed receipt for deposits and rent when the tenant asks (NRS 118A.250). On a sale, transfer the deposit to the new owner and notify the tenant. Licensed managers must keep client money in a broker trust account (NRS 645.310). | NRS 118A.242, 118A.244, 118A.250 Checked against the official source |
| New Hampshire | Hold in trust, not commingled; pay interest if held one year or more. | You may pool deposits in one trust account at a New Hampshire bank, savings and loan or credit union, or post a bond with the town clerk. Interest equals the account's savings rate. On request, tell the tenant the bank, account number, amount and rate. Transfer deposits to a buyer within 5 days and notify the tenant by certified mail. | RSA 540-A:6, II-IV Checked against the official source |
| New Jersey | Interest-bearing account at a New Jersey institution; interest belongs to the tenant. | Deposit in an insured New Jersey bank, savings bank, or savings and loan in an interest-bearing account (landlords with 10 or more units must use a variable-rate money market type account or fund). Give written notice of the institution's name and address, account type, rate, and amount within 30 days of receipt, when moving the deposit, after a sale, and with each annual interest payment. Pay or credit interest yearly. If you skip these steps, the tenant may, after written notice, apply the deposit plus 7% interest to rent. Knowingly diverting deposit money is a disorderly persons offense. | N.J.S.A. 46:8-19, 46:8-25 Checked against the official source |
| New Mexico | Interest only when an annual lease deposit exceeds one month's rent; no separate account rule in the Act. | Rent payments cannot be applied to deposits or damages without the tenant's written agreement. Licensed managers keep client money in a broker trust account. | NMSA 47-8-18(A)(1); 47-8-15(G) Checked against the official source |
| New York | Held in trust and never commingled; buildings with 6 or more units must use an interest-bearing New York bank account. | For 6+ unit buildings, notify the tenant in writing of the bank name, address and deposit amount. You may keep 1% a year as an administrative fee; the rest of the interest belongs to the tenant, paid yearly, credited to rent, or paid at lease end. | N.Y. Gen. Oblig. Law § 7-103 Checked against the official source |
| North Carolina | Trust account at an insured institution, or a surety bond; no interest required. | Within 30 days of the lease start, tell the tenant the name and address of the bank or bond company. An out-of-state account is allowed only with a bond. When you sell, transfer the deposit within 30 days and notify the tenant. | N.C. Gen. Stat. §§ 42-50, 42-54 Checked against the official source |
| North Dakota | Federally insured interest-bearing account; pay interest if occupancy was 9 months or more. | Deposits and interest transfer to the buyer when you sell, and you stay liable until they do. Unclaimed amounts after one year are reported as unclaimed property. | N.D.C.C. § 47-16-07.1(1), (3), (5) Checked against the official source |
| Ohio | 5% yearly interest on the excess over $50 or one month's rent, if the tenant stays 6+ months. | Interest is owed only on the amount above the greater of $50 or one month's rent, and it must be computed and paid to the tenant every year. The landlord-tenant statute does not require a separate account, but licensed brokers must hold deposits in a trust account (see licensing). | Ohio Rev. Code § 5321.16(A) Checked against the official source |
| Oklahoma | Hold in an escrow account at a federally insured institution in Oklahoma. No interest owed. | Misusing a deposit is a crime punishable by up to 6 months in county jail and a fine up to twice the amount taken. When the property is sold, transfer deposits to the buyer and notify tenants in writing, or refund them. Tenants cannot use the deposit as last month's rent unless the lease allows it. | 41 O.S. § 115(A), (C), (F) Checked against the official source |
| Oregon | No interest requirement. Deposit follows the property. | The person holding the landlord's interest when the tenancy ends is responsible for the deposit. Deposits are not garnishable by the landlord's creditors. A last month's rent deposit must be applied to the last month when either side gives a termination notice. Licensed managers must hold deposits in a clients' trust account. | ORS 90.300(2), (9), (17); ORS 696.241 Checked against the official source |
| Pennsylvania | Deposits over $100 go in an escrow account. Interest is owed after the second year. | Use a regulated bank and notify the tenant in writing of the bank's name and address and the amount deposited. Starting with the second anniversary, deposits must earn interest; the landlord may keep 1% a year for administration, and the rest is paid to the tenant each lease anniversary. A bond can be posted instead of escrowing. | 68 P.S. §§ 250.511b, 250.511c (§§ 511.2, 511.3) Checked against the official source |
| Rhode Island | No interest or separate account required by statute. | The deposit statute does not require interest or a separate account. If the property is sold, whoever holds the landlord's interest when the tenancy ends is responsible for the deposit. Licensed brokers must hold client money in an escrow account (see licensing). | R.I. Gen. Laws § 34-18-19(g) Checked against the official source |
| South Carolina | No interest or separate account required for landlords by the Act. | The landlord-tenant act does not require interest or a separate account. When the property is sold, the seller stays liable unless the deposit is transferred to the buyer and the tenant is notified in writing. Licensed managers must hold deposits in a trust account (see licensing). | S.C. Code §§ 27-40-410, 27-40-450 Checked against the official source |
| South Dakota | No interest or separate account required for landlords. | The statutes do not require interest on deposits or a separate account for landlords. Licensed property managers must hold others' money in a trust or escrow account (see licensing). | SDCL 43-32-6.1, 43-32-24 Checked against the official source |
| Tennessee | Hold deposits in an account used only for deposits, at a regulated bank. No interest required. | Tell tenants at lease signing where the deposit account is held (the account number is not required). | Tenn. Code Ann. § 66-28-301(a), (h) Secondary source |
| Texas | No interest required and no separate account required by the landlord-tenant statute. | Keep accurate records of all deposits. A new owner becomes liable for deposits and must give tenants a signed statement of the deposit amount. Licensed brokers holding deposits must keep them in a trust account under TREC rules. | Tex. Prop. Code §§ 92.105, 92.106 Checked against the official source |
| Utah | No interest or separate account required by the deposit statute. | The current owner or agent at the end of the tenancy is bound by the deposit rules. Licensed property managers must hold deposits in trust accounts under Division of Real Estate rules. | Utah Code § 57-17-4 Checked against the official source |
| Vermont | No statewide interest or separate account rule. | Towns may require interest by ordinance but may not dictate how deposits are held. On sale, transfer deposits to the new landlord, who must notify the tenant. | 9 V.S.A. § 4461(f)-(g) Checked against the official source |
| Virginia | No interest required. Licensed managers must hold deposits in an escrow account. | A real estate licensee must place security deposits in escrow by the end of the fifth business banking day after receipt. Unclaimed deposits can go to the State Treasurer after one year. | Va. Code §§ 55.1-1226(B), 54.1-2108.1(B) Checked against the official source |
| Washington | Deposit must go in a trust account at a Washington financial institution or licensed escrow agent. | Give the tenant a receipt and the name and address of the depository. The landlord keeps any interest unless agreed otherwise in writing. Nonrefundable fees must be labeled nonrefundable in a written lease. | RCW 59.18.270, 59.18.285 Checked against the official source |
| West Virginia | No interest or separate account required by the landlord-tenant statute. | The landlord must keep deposit records. A new owner is bound to return deposits the prior owner collected. Licensed brokers must hold deposits in a trust fund account. | W. Va. Code §§ 37-6A-2(e), 37-6A-3 Checked against the official source |
| Wisconsin | No interest required and no separate account required for landlords. | Landlords who violate ATCP 134 face suits for double damages plus attorney's fees. | ATCP 134.06; Wis. Stat. § 100.20(5) Checked against the official source |
| Wyoming | No interest required; deposits are returned without interest. | No separate account is required of landlords. Licensed brokers must keep trust funds in a Wyoming trust or escrow account. | Wyo. Stat. § 1-21-1208(a) Checked against the official source |
Laws change. Each rule shows its source and the date it was last checked. Read the statute and talk to a local attorney before acting.
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