Missouri has a new law regarding tenant security deposits that will prompt a change in practice for most multi-family owners, developers and property managers.
Under the law, made effective on Aug. 28, 2016, landlords must now keep tenant security deposits in a trust account (at a bank, in an insured account), segregated from landlord’s operating and other accounts. Real estate brokers licensed in Missouri are exempt from the trust requirements of the new law, but still must keep security deposits in a separate account. Note that HUD loans have always required a separate escrow account for the security deposits and prohibited commingling the deposits with the landlord’s general accounts.
Another change is that landlords can charge for carpet cleaning and deduct the actual amount from the security deposit so long as the lease contains a specific provision regarding this service.
H.B. 1862, passed by the Missouri Legislature at the end of the 2016 session, did not change other significant provisions of the security deposit law, including the maximum amount permitted (two times monthly rent), and the requirement to within 30 days after the end of the tenancy return the security deposit or render an accounting of the use of the deposit.
Landlords accustomed to simply keeping tenant security deposits in landlord’s operating accounts, and refunding at the end of the tenant’s term or occupancy will now need to establish separate accounts satisfying the new law. Landlords should also consider revising their form leases to take advantage of the new law permitting landlords to charge tenants for carpet cleaning.
Hap Burke, and Dan Engle are attorneys in Thompson Coburn’s Real Estate group.