Pennsylvania Security Deposits

[Jeff Lehman]

I'm buying my first 2 unit rental this week. A question is come up about the security deposits. The question is, do I need to keep each individual's security deposit separate, in separate accounts? I was talking to the bank, and they have two options. The first option is an umbrella account with individual accounts for each tenant. This option requires an LLC, which I do have.

The second option is a personal account and my understanding is that the tenants security deposits would be commingled. 

Can anybody tell me if commingling is allowed or if they must be separate.

The owner of the property that I'm buying does not have the security deposits in an interest-bearing escrow account. Can anyone venture an educated guess on whether I'll be responsible for the interest for the time that he owned the property?

[Chris K.]

@Jeff Lehman

I'm traveling today so I don't have the statute in front of me. But if you take a look at the relevant parts, it says something along the lines of "the landlord may charge an administrative fee" of some amount (1% a year I believe). Since it is unlikely that you can find an escrow account that gives you more than 1% interest a year, you generally don't have to worry about the interest portion. 

I personally would separate regardless of how many years the tenants have been with you. It's relatively easy to do and guards against crazy events. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.