I use 2 local credit unions for tenant's SD escrow accounts as well as for their rent payments. Both of these credit unions have locations near my rentals which makes it convenient for my tenants to deposit their monthly rent. Their SD accounts are set up so they tenant can't actually close them or even make a withdrawal. Other than issues with their limited hours during the first year of COVID restrictions, it's worked out just fine for both myself & my tenants.

Lynn[MA], who regularly posts here uses Zdeposit which is a spin off from Leader Bank for his SD escrow accounts. I looked into using them but with my limited computer skills, I didn't feel it was a good fit for me personally. If he sees your post I'm sure he'll pass along his experience with them.

In the mean time last summer there was a good post about this.

Sec Dep mess up Jul 14, 2020 7:10 PM

For any non MA LL who might be interested in what we MA LLs have to do in order to collect a SD from a tenant, here's a brief explanation that I gave in my 07/15/2020 posting.

Sec Dep mess up (by Steve [MA]) Posted on: Jul 15, 2020 5:48 AM

FYI below is some of what we MA LLs must do if we choose to collect a SD. After reading this you can see why some MA LLs just require a first, a last and a lock / key fee.

The following is from A. Joseph Ross, J.D.'s book "HOW TO BE A LANDLORD IN MASSACHUSETTS AND AVOID LEGAL TROUBLE" Revised, May 2020 By A. Joseph Ross, J.D.

For a security deposit, you must:

# place it in an escrow account in a Massachusetts bank free from the reach of your creditors;

# transfer the deposit to the new owner when you transfer the premises;

# give the tenant a receipt showing the amount of the deposit, your name, the address of the premises, and the name of the bank and the account number in which the security deposit is being held;

# give the tenant a statement of the present condition of the premises (Various landlords’ associations have forms to comply with this requirement);

# if the tenant submits to you a separate list of damages, you must return a copy of the tenant's list to the tenant within fifteen days of receiving it, with either your signed agreement with the list or a clear statement of your disagreement attached;

# pay the tenant interest on the deposit at the rate of 5% per year or the amount of interest you receive from the bank if that is less;

# keep careful records on the security deposit and make them available to the tenant for inspection at your office during normal business hours. You must return the security deposit within 30 days after the tenant moves out, if the tenant is a tenant at will, or within 30 days after the expiration of the lease if there is one. You may only deduct unpaid rent or water charges which have not been validly withheld or deducted, taxes due under an escalator clause, and the cost of damage the tenant has done to the premises (this does not include normal wear and tear). If you deduct for damages, you must follow the procedure in the statute exactly.

If you are deducting for damages, you must provide the tenant with an itemized list of damages, signed under penalties of perjury, itemizing in precise detail the nature of the damage and the repair necessary to fix it, with written evidence, such as estimates, bills, invoices, or receipts, indicating the actual or estimated repair cost, within 30 days of termination of the occupancy under a tenancy at will or the end of the tenancy under a lease. This must be followed exactly, or your tenant may sue for treble damages plus attorneys fees. Be careful. You can be hit with treble damages for small errors, such as not signing the list under penalties of perjury or having the account in an out-of-state bank.

If you fail to comply with any of these requirements, the law allows the tenant to sue you for damages, including return of the deposit. For some violations, damages include three times the interest due or three times the amount of the deposit, plus the tenant's attorney's fees. A violation of any of these provisions may also be a violation of Mass. General Laws, ch.93A, the Massachusetts Consumer Protection Law.

If you have already violated the law, it is generally safest to return the security deposit immediately to avoid having to pay treble damages. You may not like to do this,

especially where the tenant owes rent or has severely damaged the unit. But even if it isn't clear that you have violated the law, returning the deposit will probably save you money. The Massachusetts Appeals Court has ruled that, so long as the tenant still occupies the apartment, you may avoid the treble damages by returning the security

deposit immediately on demand. (Castenholz v. Caira, 21 Mass. App. Ct. 758, 490 N.E. 2d 494 (1986).) See why we advised you not to take a security deposit?

Since the rules are different for security deposits and last months rent deposits, it is important for you to see that the documents make clear which kind of deposit you

are taking. If the tenant pays by personal check, be sure the description of the payment in the "memo" section of the check is correct. If it is incorrect, or if the tenant pays in any way other than a check, be sure to give a receipt which includes an accurate description of the payment. And keep a copy of the receipt in your records.

The security deposit and last month's rent law does not apply to any rental for a vacation or recreational purpose of 100 days or less in duration. It also does not apply

Steve, NC has much the same laws. No big deal.

# place it in a trust account in a bank licensed to do business in NC

# transfer the deposit to the new owner when you transfer the premises (that's a given! But we also have the option of returning it to the tenant if the new owner doesn't request it.)

# give the tenant a receipt showing the amount of the deposit, your name, the address of the premises, and the name of the bank and the account number in which the security deposit is being held: This is all spelled out on the first page of the lease. Again, no biggie.

# give the tenant a statement of the present condition of the premises...Addressed in my lease. Could do better on this one but it's addressed.

# if the tenant submits to you a separate list of damages...We give the tenant 7 days, but 15 is okay if we had to.

# pay the tenant interest on the deposit at the rate of 5% per year or the amount of interest you receive from the bank if that is less (This we do not have to do, LL is allowed to collect the interest for themselves if noted in the lease, but not hard to do it the other way.)

# keep careful records on the security deposit and make them available to the tenant for inspection at your office (don't have an office, but would gladly send the tenant a bank statement if asked. Nothing happens with the SD until end of tenancy anyway.)

If you are deducting for damages, you must provide the tenant with an itemized list of damages...all of this except the perjury thing, but I could add that to my standard itemized letter no problem.