Is it true that in PA, a tenant does NOT need to be refunded interest on their security deposit if < 2 years?
I have a tenant who is requesting 6% interest be included in her return of security deposit. She states that this is PA law. She only lived in the apartment for 1 year.
I looked it up on line, and found that this does not seem to be true, but I’m looking for clarification. This is what the site states:
Section 250.511b. Interest on escrow funds held more than two years
(a) Except as otherwise provided in this section, all funds over one hundred dollars ($100) deposited with a lessor to secure the execution of a rental agreement on residential property in accordance with section 511.18 and pursuant to any lease newly executed or reexecuted after the effective date of this act shall be deposited in an escrow account of an institution regulated by the Federal Reserve Board, the Federal Home Loan Bank Board, Comptroller of the Currency, or the Pennsylvania Department of Banking. When
any funds are deposited in any escrow account, interest-bearing or noninterest-bearing, the lessor shall thereupon notify in writing each of the tenants making any such deposit, giving the name and address of the banking institution in which such deposits are held, and the amount
of such deposits.
(b) Whenever any money is required to be deposited in an interest-bearing escrow savings account, in accordance with section 511.1, then the lessor shall be entitled to receive as administrative expenses, a sum equivalent to one per cent per annum upon the security money so deposited, which shall be in lieu of all other administrative and custodial expenses. The balance of the interest paid shall be the money of the tenant making the deposit and will be paid to said tenant annually upon the anniversary date of the commencement of his lease.
(c) The provisions of this section shall apply only after the second anniversary of the deposit of escrow funds.
I know it seems obvious, but am I interpreting this correctly? I want to be totally sure before I deny her this interest.
Thank you.
Rent Back
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Filed under: flat mortgage
Nowhere in this does it say what you assume. You are blindly reading something into it that is just not there.
This talks about the manner of depositing a tenant’s security and a deduction for adminstrative expenses after two years. It DOES NOT say the interest does not have to be refunded anywhere in this.
In other words, if you are holding a tenant’s security deposit for a period of LESS THAN two years it does not have to be deposited in an escrow account of an institution regulated by the Federal Reserve Board and you MAY NOT deduct anything for expenses. So after holding the money for two years you must deposit it as specified and may deduct an administrative expense for doing so. You must also pay interst to the tenant ANNUALLY on the anniversary date of the lease. This means you must pay the interst to the tenant every year. You dont’t get to keep it ever, except for the 1% as expenses (if it is earning 4%, you get 1% and the tenant gets 3%.).
Call your Public Protection Division in your county They have the laws and will tell you. I live in PA and that number is in your phone book. They also have a Hotline right in their office and lawyers. Anyone there will give you the correct answer.