House Bill 1862
The State of Missouri has recently passed House Bill 1862 which changes the rules on holding tenant security deposits.
If you are a landlord who is not a licensed Missouri real estate broker the following rules apply:
- All security deposits must be held in a bank, credit union or other depository institution insured by an agency of the federal government.
- 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.
- Security deposits may not be commingled with other funds of the landlord.
- Any interest earned on the account containing security deposits becomes the property of the landlord.
- The law specifies that a landlord and tenant may agree in the rental agreement to withhold from the security deposit an amount of fee for specific services that may be required to return the rental premises to its condition at the commencement of the tenancy, so long as the rental agreement includes a provision notifying the tenant that he or she may be liable for actual costs for carpet cleaning that exceed ordinary wear and tear, which may also be withheld from the security deposit. Previously, a landlord was authorized to withhold only the amount that is reasonably necessary to restore the dwelling unit to its condition at the commencement of the tenancy, ordinary wear and tear expected.
Another option is to deposit tenant security deposits into Deca’s security deposit escrow account. This is a separate account that only holds security deposits from tenants. These funds are only available when the tenant terminates their lease (as a security deposit refund) or will be transferred to your escrow account to cover tenant forfeit of rent and/or damages.