August 29, 2002
SECURITY DEPOSITS—LANDLORDS DUTIES AND RIGHTS
By: Sandra Norman-Eady, Chief Attorney
You asked whether landlords can lose their right to security deposits that are not kept in separate bank accounts and whether they can recover property damage from deposits that were not maintained separately.
Landlords do not have a “right” to security deposits paid by tenants; thus, they cannot lose this right for failure to keep the deposits in separate bank accounts. The deposit remains the tenant's property in which a landlord has a security interest (CGS § 47a-21 (c)). In other words, the tenant owns the security deposit but the landlord can deduct from it damages he suffered as a result of the tenant's failure to meet certain obligations, like paying rent and keeping the rental property damage-free.
A landlord can ask a tenant to pay up to two months rent in security deposits (only one month if the tenant is age 62 or older) (CGS § 47a-21(b)). Since October 1, 1979, the law has prevented landlord from co-mingling the tenant's security deposit with the landlord's other monies. Landlords must keep security deposits in one or more escrow accounts for the tenant until the tenancy is terminated. Once the tenancy terminates the landlord must return the deposit plus interest (currently 1.5%) and less the value of any damages to the tenant (CGS § 47a-21(h) and (d)).
Any landlord who knowingly and willfully violates the requirement for security deposits to be maintained in separate escrow accounts is subject to a fine of up to $500, imprisonment for up to 30 days, or both for each offense if at the time of the offense he leased four or more residential units (CGS § 47a-21 (k)(2)). Additionally, the banking commissioner can order any landlord, regardless of the number of units he leases, to place into an escrow account any security deposit that at the time of a complaint is not in one (CGS § 47a-21(j)). Landlords who fail to keep security deposits in separate escrow accounts do not lose their interest in the security deposits.