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WCLawyer
WCLawyer, Attorney
Category: South Africa Law
Satisfied Customers: 15597
Experience:  L.LB (UOVS)
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I rent out properties and keep the deposits in a trust account.

Resolved Question:

I rent out properties and keep the deposits in a trust account. Can I deposit some of the deposit money in another interest bearing account?. May I invest it an a money-market account?
Submitted: 6 years ago.
Category: South Africa Law
Expert:  WCLawyer replied 6 years ago.
Good day.

The Rental Housing Act only require that you invest it in an interest bearing account of which the rate of interest may not be less than that of a savings account of the bank you deposited the money at. The interest should also be to the benefit of your tenant.

So, if the money market account earns your tenant more interest than a savings account, you may deposit it in a money market account.
Customer: replied 6 years ago.
I am an estate agent , and as far as I know do not have to pay interest on deposits. My trust account is audited every year and I keep a separate deposit account I will have that as part of the audit.
Expert:  WCLawyer replied 6 years ago.

Section 5(3)(d) of the Rental Housing Act reads as follows:


the deposit contemplated in paragraph (c) must be invested by the landlord in an interest-bearing account with a financial institution and the landlord must subject to paragraph (g) pay the tenant such interest at the rate applicable to such account which may not be less than the rate applicable to a savings account with that financial institution, and the tenant may during the period of the lease request the landlord to provide him or her with written proof in respect of interest accrued on such deposit, and the landlord must provide such proof on request: Provided that where the landlord is a registered estate agent as provided for in the Estate Agency Affairs Act, 1976 (Act No. 112 of 1976), the deposit and any interest thereon shall be dealt with in accordance with the provisions of that Act;

 

If the money is therefore kept in your trust account, the interest is paid to the Estate Agency Affairs Board.

 

I am not familiar with the rules and the regulations of your regulatory body, but if I was you, I would clear it with them first, since this could affect the re-issue of your fidelity fund certificate.

 

Be that as it may, you cannot deposit tenant's security deposits for your own benefit. Not even if the tenant agrees to it contractually. So, the interest will either fall to the Estate Agency Affairs board or the tenant.

 

This, of course, will not be the case if the landlord is entitled to hold back the deposit for arrears in terms of the agreement or damages.

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