New (Aug 2016) security deposit law question.

[Gary Bennett]

I have a few questions on the new security deposit statues. http://www.moga.mo.gov/mostatutes/stathtml/5350000...

It states that all security deposits must be "held in a trust established by the landlord and deposited in a bank, credit union, or depository institution account in the name of the trustee".  The statues link to a form prepared by a law firm to comply with the new laws - http://www.scottlawfirm.com/deposits.htm

I'm unfamiliar with trusts, and I'm not sure if I have to set up a separate bank account for each property, each with it's own trust, or one bank account with one trust. I haven't  heard anything about this from my local landlords group, or the rei group I attend.

If someone could let me know what I actually have to do to comply, that'd be wonderful.

Edit: Is there something special I have to do for a "trust account" or is it just a normal checking account that must be kept separately?

[Matt R.]

I am not a lawyer and this is not legal advice.

What I've heard is that what the Missouri Legislature was trying to do was require that the tenants' security deposits be kept in a separate bank account, and not mixed in with a landlord's other funds.

However, calling it a "trust" in the legislation technically means you need to get a lawyer and set up a trustee and file some paperwork and a bunch of good stuff that costs at least a few hundred dollars.

The landlords I know around the KC area have been taking one of two approaches:

1) Set up a separate bank account at the place where you do your landlord banking.  Some people like to put a name on that account like "Gary Bennett Trust", or "Acme Real Estate Trust", even if the account is held by you personally and not a full legal trust.  Then, the security deposits, and nothing else, go into this account.

2) Ignore it.  The basis for this idea is that there's no penalty for not doing it.

I'm not sure if you need multiple accounts (one per property), or if you can put the security deposits from all your properties in one account.  I think people that are setting up a separate account are just doing one account and putting deposits from all their properties in it.

There was a little bit of motion towards changing this in Jeff City earlier this year, but it disappeared among the general train wreck that was the 2017 Missouri legislative session.

I am not a lawyer and this is not legal advice.