How should a property manager handle tenants' security deposits?

A property manager should keep tenants' security deposits in a separate trust account to ensure compliance with legal and ethical responsibilities. This practice protects both the tenants and the property manager, as it distinctly segregates the security deposits from the property manager's personal funds and the owner's operating funds.

By using a separate trust account, the property manager can accurately track the funds and ensure that they are returned to the tenants in accordance with local laws and regulations upon lease termination. Different states, including Oregon, often have specific requirements regarding how security deposits must be handled. Keeping the funds in a trust account also provides an added layer of transparency and accountability, which can prevent disputes and build trust with tenants.

This approach helps avoid any potential misuse of the security deposit funds, such as spending them on personal ventures or paying other business expenses, which could lead to legal complications. Therefore, maintaining a separate trust account for security deposits is fundamentally important in property management practices.