Question about security deposit and business account

[Vasudev Kirs]

My tenant will be transferring security deposit into my business account. Are there any restrictions on whether I can use it for other expenses or should they stay in that account?  Below are the laws from my state regarding security deposit:

https://revisor.mo.gov/main/OneSection.aspx?section=535.300

1. Can I move security deposit into a brokerage account or should it stay in the original business account?

2. If it needs to stay in the original account, can I use it to pay for other expenses?

3. Can I move rental income into a brokerage account?

Thank you!

[David Bennett]

Tim is correct that you should consult with someone familiar with your laws.

But best practices for Security Deposits (and last month's rent or other funds held in TRUST) is to keep it separate from your operating funds to avoid commingling and using funds for other than their intended purpose. Always remember that these funds are NOT yours.

From your post about Missouri laws I will highlight a few words:

2. All security deposits shall be held by the landlord for the tenant, who is a party to the rental agreement, in a bank, credit union, or depository institution which is insured by an agency of the federal government. Any interest earned on a security deposit shall be the property of the landlord.

You are holding them for the tenant, not for you. But is your brokerage account federally insured? If so, maybe...

But a brokerage account implies securities, which implies potential loss. Are the funds simply gaining interest (which you are entitled to keep) or is there a potential for loss? If there is a potential for loss of any kind, then you are using their funds for your benefit - i.e. gambling with other peoples money - so definitely a place you don't want to go.