By Attorney Jason Doyon
Under Connecticut law, a residential landlord is to pay accrued interest to the tenant on any security deposits held by the landlord once a year on the anniversary date of the tenancy. Sounds like a simple enough concept, right?
Unfortunately, some residential landlords are uninformed or simply do not observe the law in this area and do not pay the accrued interest due their tenants each year. The consequences can be significant in that if the landlord is found to have knowingly and willfully neglected to pay the security deposit, the landlord may be fined up to one hundred dollars for each offense. Quite a significant price when you consider that in many cases, landlords have neglected to pay interest for at least several years, and that the interest amount is frequently in the $15-$30 range.
The solution? As soon as a landlord receives a security deposit, place the whole amount into an escrow account at the bank, which is required by law anyways, and pay the accrued interest due to the tenants every year on the anniversary of the tenancy. That way, the security deposit is accounted for and does not get co-mingled with the landlord’s other assets, the tenant gets their interest, and both parties can go on to hopefully have a good working relationship together.