State Specific Question About: WASHINGTON (WA)

I have a couple of rental houses here in Seattle, and I keep my damage deposits in an ordinary savings account in my name at a local branch of Washington Mutual bank. I don't have any other accounts at that bank (or at any other branch of WaMu), and all the money in that account is from damage deposits (+interest). I have two questions:

- Does that meet my legal obligations as a landlord in Washington State?

- Could I move the damage deposits to a separate account in my credit union (where I keep my own day-to-day accounts)? I would like to do the latter because I'm ticked off that WaMu pays only a measly 0.25% on this account, whereas my credit union will pay 2.5% It's not a lot of money, but I don't like dealing with WaMu in any case.

After reviewing WA laws, it sounds like all you have to do is let them know where the money is. Doesn't sound like it matters to the state which account you keep it in. In MN, we have to put the SD in an interest bearing account paying a minimum rate(I think it's 1% this year, changes each yr). In MN, the minimum interest earned on SD belongs to tenant.

Thanks for your reply, Jody. That was my understanding too. My only reservation is the term "trust account." I'm not sure a savings account qualifies, but on the other hand, it's up to the landlord to disperse (or not) the monies at the end of a tenancy, not some middleman (i.e., escrow company).

As you stated, in Washington, the landlord gets to keep the interest, but I would willingly give it to the tenants if I was able to calculate it precisely. Lately, the bank has even stopped sending statements. I called them today and they said I would have to come in and make a deposit or withdrawal to keep the account "current."

The answers are YES and YES.

Either of your scenarios will be fine. I would definitely put the money where it will gain the most interest. You might also check out ING Direct.

The law that governs this is RCW 59.18.270.

The term "trust account" is vague, but my research on this subject has concluded that it is not worth agonizing over this terminology. If you go into a bank and ask for a "trust account" they will not magically have some special account for you. The terminology implies the purpose of the account, not the physical type of the account at the bank.

To summarize: if you have a single account(separate account # from your other accounts) that is dedicated to holding deposits from all your tenants, you are following the law.

It's worth noting that the RCW does not use the word "separate", so even the technique in the aforementioned paragraph is more than is explicitly required in my opinion.