Lease landlord tax clause

[Matthew Byers]

Greetings,

I am looking at a lease and it has a clause that says "If the amount of the security depost is in excess of $50 or one month's rent, whichever is greater, and the tenant remains in possession of the premises for at lease six months, Landlord shall pat interest in excess at the rate of 5% per year to be paid annually." My question is what is the point of this clause and how exactly does it work? IE: My tenant pays $300 deposit and the rent is $600. Does this clause still apply? Thanks for any replies. 

[Andrew B.]

First qualifier that's written into your lease "If the amount of the security depost is in excess of $50 or one month's rent, whichever is greater"

What is greater, one month rent or $50? (Likely one month rent)Is your security deposit greater than that number? If so, you must pay tenant 5% interest.

Id security deposit is $300 and rent is $600, you pay no interest because security deposit is not greater than 1 month rent.

Purpose? No idea. Sounds like something a tenant would want, not a landlord. I can't even find a bank that pays over 2% but the tenant gets 5%? No thank you. Take it out if your state law allows.

No legal advice is given.