Insurance and Real Estate Committee

JOINT FAVORABLE REPORT

Bill No.:

HB-5437

Title:

AN ACT CONCERNING SECURITY DEPOSITS.

Vote Date:

2/10/2011

Vote Action:

Joint Favorable

PH Date:

1/25/2011

File No.:

SPONSORS OF BILL:

Insurance and Real Estate Committee

REASONS FOR BILL:

Currently, landlords are required to pay tenants no less than 1.5% interest on their security deposit when a tenancy is terminated. Landlords should only be required to pay the going interest rate, or interest no greater than that which could be obtained from depositing the security deposit in a financial institution. In addition, there is a need to give tenants the freedom of the option to submit their forwarding address via electronic mail.

RESPONSE FROM ADMINISTRATION/AGENCY:

None Expressed

NATURE AND SOURCES OF SUPPORT:

Representative Marilyn Giuliano, 23rd District submitted testimony stating that banks are only paying a fraction of the 1.5% interest required of a landlord. This is unfair, and must be dealt with. Other states adjust the interest owed to the tenant based on current bank rates, so neither party loses money. By matching the amount of interest paid out by landlords with the current band deposit rates, this problem will be solved as HB-5437 suggests.

Marshall R. Collin, Counsel for Government Relations of the CT Coalition of Property Owners wrote, saying that neither tenants nor landlords should experience a financial loss from security deposits. The interest formula as laid out by this bill is fair to both landlords and tenants.

Niel J. Griffin Jr., Senior Vice President of the CT National Association of Housing and Redevelopment Officials expressed his support of the email option for tenants, but also expressed his concern that it may be filtered out as junk mail or spam, and suggested that the landlord be required to respond acknowledging receipt of the email. He also agreed with the language eliminating the 1.5% interest requirement for security deposits.

Nadine Johnson wrote that as a landlord, she was concerned about having to pay 1.5% interest when banks were paying as little as 0.05% if there is less than $10,000 in the account. This means that the landlord must pay 6 times to 30 times the interest earned by state law.

NATURE AND SOURCES OF OPPOSITION:

Raphael Podolsky of the Legal Assistance Resource Center of CT, Inc. testified, pointing out the fact that there are many easily available escrow accounts, and that a landlord should not have trouble finding one that pays 1.5% interest. He also brought the Committee's attention to particular examples of escrow accounts available through CT banks, and provided paperwork.

Reported by: Paul Brunner

Date: 3/4/2011