Security deposit not held in escrow account
Many states require deposits be held in a separate escrow account. If yours does and this clause says otherwise, it's illegal.
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What it actually means
Escrow protects your money — if the landlord goes bankrupt, your deposit is safe.
Check state law. If escrow is required and the landlord isn't complying, you may be entitled to immediate return of the deposit.
What it looks like in a lease
"Security Deposit shall be held in Landlord's general operating account."
What to watch for
- State escrow requirements
- Whether interest is owed
How to negotiate it
'State law requires a separate escrow account. Please confirm compliance.'
When it crosses into a red flag
- General account in escrow-required state
Frequently asked questions
What if they don't use escrow?
Report to your state attorney general. You may be entitled to the deposit back plus penalties.
Want to know how this works in your specific state? Read the Security deposit laws guide, or pick your state from the guide index.
Related clauses
General information, not legal advice. Clauses are interpreted differently across states and courts. For a binding interpretation of your specific lease, consult a licensed attorney in your state.
