PA - Security Deposit questions (interest, renewals)

[Craig C.]

In Pennsylvania, tenants who occupy a rental unit over 2 years are entitled to interest on the security deposit. My tenants signed a 1 year lease, then a 6 month extension (actually titled “lease renewal”), and then another 6 month extension. My question is about moving forward since they’ll be over the 24 month mark.

I haven’t refunded the original deposit (1 month rent) due to the extensions/renewals. At month 25 should I refund and start an entirely new lease? Would that lease then just state the “move-in” condition as per the original lease or should I do a full “damage inspection” with deductions and get a new deposit?

For below I’m referencing the PA Landlord Tenant Act, Title 68, sections 250.511 to 250.512 (https://www.thelpa.com/PA_landlord_tenant_act.pdf)

So, that means only interest earned from month 25 on, right? I’d keep anything earned from 0-24?

My lease say the SD is deposited in a “non-interest bearing account”- so is that actually void?

Mine isn't in an “escrow”, just a separate savings account. Should I move it??

Since I’m getting less than a 1% return, I’ll just keep the interest anyway, but do I need to send an annual notice to the tenant stating it’s because of a 1% fee?

[David Krulac]

@Craig C.

If the security is 1 months rent and you reach the 2 yr point, you do not have to refund the security in PA.  You have to pay interest.  I've had many PA tenant who go beyond 2 years.

Many banks will set up subaccounts, one for each tenant with interest paid to the tenants SSN and you control the account until the tenant moves on.

You must refund the tenants security deposit within 30 days for them leaving or provide a detailed charge list against the security deposit and the interest accrued.

The banks set up these accounts for free and the interest which accrues to the tenant is very small in todays economy something like 0.25% interest per year.  Its easy to do and costs zero.