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Frequently Asked Questions
- Which states require landlords to pay interest on security deposits?
- States that require interest on security deposits include (among others): Connecticut, Iowa, Maryland, Massachusetts, New Jersey, New Mexico, New York, North Dakota, and Virginia. Rates and requirements vary significantly by state — some require deposits to be held in separate escrow accounts, others only require interest payments above a minimum deposit threshold. Always verify current requirements with your state's tenant rights office.
- What is the typical interest rate for security deposits?
- State-mandated rates vary from as low as 0.5% to as high as the prevailing passbook savings rate. Many states update the required rate annually. For commercial leases, the interest rate (if any) is a matter of negotiation and should be specified in the lease itself.
- What happens if my landlord doesn't pay interest on my deposit?
- In states that require it, failure to pay deposit interest can entitle you to penalties — sometimes double or triple the unpaid interest. The unpaid interest may also serve as a defense if the landlord attempts to withhold your deposit for damages. Check your state's specific statutes for the remedies available to you.