Do Security Deposits in Pennsylvania Need to Be in an Interest Bearing Bank Account?

Full question:

In the state of PA, what is the rules for 'Procedures concerning security deposits vary widely from state to state, with a sizable minority of states requiring placement in a separate, interest bearing bank account with interest being periodically paid out to tenants.' Is there any? I appreciate your help!

• Category: Landlord Tenant
• Subcategory: Security Deposit
• Date: 04/07/2025
• State: Pennsylvania

Answer:

Whether or not a landlord is required to put a tenant's security deposit into an escrow or interest bearing account would be determined by the contract terms in the lease in each case. There is no statutory requirement in PA landlord tenant state statutes. Please see the following PA statute:

68 P. S. § 250.511a. Escrow funds limited

(a) No landlord may require a sum in excess of two months' rent to be
deposited in escrow for the payment of damages to the leasehold premises
and/or default in rent thereof during the first year of any lease.

(b) During the second and subsequent years of the lease or during any
renewal of the original lease the amount required to be deposited may not
exceed one month's rent.

(c) If, during the third or subsequent year of a lease, or during any
renewal after the expiration of two years of tenancy, the landlord
requires the one month's rent escrow provided herein, upon termination of
the lease, or on surrender and acceptance of the leasehold premises, the
escrow funds together with interest shall be returned to the tenant in
accordance with sections 511.2 and 512.[fn1]

(d) Whenever a tenant has been in possession of premises for a period
of five years or greater, any increase or increases in rent shall not
require a concomitant increase in any security deposit.

(e) This section applies only to the rental of residential property.

(f) Any attempted waiver of this section by a tenant by contract or
otherwise shall be void and unenforceable.