What must landlords do when they receive advance rent or a security deposit?

When landlords receive advance rent or a security deposit, the requirement to deposit it into a non-interest-bearing account is based on the protections and regulations governing tenant funds. This practice is in place to ensure that the security deposit is kept separate from the landlord's personal funds, thereby protecting the tenant's money.

Depositing the advance rent or security deposit into a non-interest-bearing account helps to maintain transparency in financial dealings between landlords and tenants. It assures tenants that their funds are secure and not being misused, and it is a common legal requirement in many jurisdictions. This ensures that should any disputes arise regarding the return of the security deposit at the end of the lease, there is clear evidence of where the funds have been held.

In contrast, using the funds for property improvements is not permissible as it would place the landlord's interests above the protections owed to the tenant. Providing a verbal receipt does not offer sufficient protection or documentation for the tenant. Lastly, investing the funds in a savings account may raise complications or regulations that landlords need to abide by, which going to non-interest-bearing accounts typically sidesteps.