What must a property manager do with a security deposit in the absence of specific language in the Property Management Agreement?

What must a property manager do with a security deposit in the absence of specific language in the Property Management Agreement?

• A. Return it to the tenant immediately
• B. Deposit it into an escrow account
• C. Invest it in a savings account
• D. Deposit it into the owner's personal account

Answer: (B)

A property manager is required to handle security deposits according to the law and best practices to ensure the funds are protected and managed appropriately. In the absence of specific language in the Property Management Agreement detailing how to handle the security deposit, the most responsible and compliant action is to deposit it into an escrow account. This procedure safeguards the tenant's funds while clearly delineating ownership and ensuring that the money is not commingled with the property manager's or the owner's personal funds. Escrow accounts are typically regulated and designed specifically for holding such deposits, providing assurance that the funds can be clearly accounted for at the end of the lease or rental period, whether returning it to the tenant or using it for lawful deductions, such as repairs due to tenant damages.

A property manager is required to handle security deposits according to the law and best practices to ensure the funds are protected and managed appropriately. In the absence of specific language in the Property Management Agreement detailing how to handle the security deposit, the most responsible and compliant action is to deposit it into an escrow account.

This procedure safeguards the tenant's funds while clearly delineating ownership and ensuring that the money is not commingled with the property manager's or the owner's personal funds. Escrow accounts are typically regulated and designed specifically for holding such deposits, providing assurance that the funds can be clearly accounted for at the end of the lease or rental period, whether returning it to the tenant or using it for lawful deductions, such as repairs due to tenant damages.