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  1. #1
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    May 2011
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    Default Can a Third Party Hold Security Deposits

    My question involves landlord-tenant law in the State of: GEORGIA

    Can a third party hold a security deposit?

    IE: If you rent my house from me and give me a deposit... legally, can my brother (who is not a licensed agent, broker, ect.) hold the deposit?

    If so, how does it work? Is there a certain account the deposit has to go in? Does the third party have to be licensed? Please help!

  2. #2
    Join Date
    May 2011
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    Default Re: Secuirty Deposits

    Quote Quoting kkitzel
    View Post
    My question involves landlord-tenant law in the State of: GEORGIA

    Can a third party hold a security deposit?

    IE: If you rent my house from me and give me a deposit... legally, can my brother (who is not a licensed agent, broker, ect.) hold the deposit?
    Are you paying your brother a fee to act as your Holder?

    If so, how does it work? Is there a certain account the deposit has to go in? Does the third party have to be licensed? Please help!
    Home renting LLs typically mix security deposit funds with their own funds without placing them in escrow. If there is a 3rd party holder of funds whi is paid a fee, then...

    http://www.rentlist.net/LTsecdep.htm

  3. #3
    Join Date
    May 2011
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    2

    Default Re: Secuirty Deposits

    The third party will be receving a fee... however, this person is not in real estate, nor licensed in anyway. Is this legal? How should the deposit be held?

  4. #4
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    Default Re: Secuirty Deposits

    If you want to be a landlord, you need to educate yourself about the laws governing the business.
    Quote Quoting OCGA 44-7-31. Placement of security deposit in trust in escrow account; notice to tenant of account location
    Except as provided in Code Section 44-7-32, whenever a security deposit is held by a landlord or such landlord's agent on behalf of a tenant, such security deposit shall be deposited in an escrow account established only for that purpose in any bank or lending institution subject to regulation by this state or any agency of the United States government. The security deposit shall be held in trust for the tenant by the landlord or such landlord's agent except as provided in Code Section 44-7-34. Tenants shall be informed in writing of the location of the escrow account required by this Code section.
    Quote Quoting OCGA 44-7-32. Surety bond in lieu of escrow account; withdrawal of surety; fees; liability of clerk of superior court
    (a) As an alternative to the requirement that security deposits be placed in escrow as provided in Code Section 44-7-31, the landlord may post and maintain an effective surety bond with the clerk of the superior court in the county in which the dwelling unit is located. The amount of the bond shall be the total amount of the security deposits which the landlord holds on behalf of the tenants or $50,000.00, whichever is less. The bond shall be executed by the landlord as principal and a surety company authorized and licensed to do business in this state as surety. The bond shall be conditioned upon the faithful compliance of the landlord with Code Section 44-7-34 and the return of the security deposits in the event of the bankruptcy of the landlord or foreclosure of the premises and shall run to the benefit of any tenant injured by the landlord's violation of Code Section 44-7-34.

    (b) The surety may withdraw from the bond by giving 30 days' written notice by registered or certified mail or statutory overnight delivery to the clerk of the superior court in the county in which the principal's dwelling unit is located, provided that such withdrawal shall not release the surety from any liability existing under the bond at the time of the effective date of the withdrawal.

    (c) The clerk of the superior court shall receive a fee of $5.00 for filing and recording the surety bond and shall also receive a fee of $5.00 for canceling the surety bond. The clerk of the superior court shall not be held personally liable should the surety bond prove to be invalid.

  5. #5
    Join Date
    May 2011
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    68

    Default Re: Secuirty Deposits

    FYI

    OCGA 44-7-31 thru 35 is further defined by

    44-7-36 G



    Code Sections 44-7-31, 44-7-32, 44-7-33, and 44-7-35 shall not apply

    to rental units which are owned by a natural person if such natural
    person, his or her spouse, and his or her minor children
    collectively own ten or fewer rental units; provided, however, that
    this exemption does not apply to units for which management,
    including rent collection, is performed by third persons, natural or
    otherwise, for a fee.

    The fee is the thing! Once a fee is introduced then a claim can be made that the person making the fee must be properly licensed under the real estate licensing laws of Georgia otherwise the fee could be considered illegal.

    WTS, using an Agent who is not professionally acquainted with the numerous laws of Georgia which govern the holding of funds, the responsibilities and liabilities, is Danger Will Robinson.

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