Need to open a "Security Deposit Account" with being out of state

[Kristopher Kelly]

Hello BP Fam,

I am hitting the forums today with a question due to talking to my bank today. In the state of Delaware, the security deposit must be held in a "security deposit account". My question is do any out-of-state real estate investors know how to set this up when out of the state? The account must remain in Delaware so I need to find something where when I am out of state I can still have a tenant send the funds to the account. The banker I talked to today said that I and the tenant have to be at the bank when making the account due to the tenant's social security number having to be linked to it? How do people rent out of state with this problem then? Without property managers? Any help in this will be greatly appreciated! Thank you in advance! 

[Nathan Gesner]

Call around to other banks because this doesn't make sense. Can you imagine an investor with 100 units going to the bank with their new tenant 50+ times a year? Nonsense.

The law says, "Each security deposit shall be placed by the landlord in an escrow bank account in a federally-insured banking institution with an office that accepts deposits within the State. Such account shall be designated as a security deposits account and shall not be used in the operation of any business by the landlord. The landlord shall disclose to the tenant the location of the security deposit account."

You can read it for yourself or talk to an attorney: https://delcode.delaware.gov/t...

I think their intent is that you have a separate account designated for security deposits, held separate from operating funds. I've never heard of a bank attaching the Tenant's social to an account or requiring the Tenant to be present.