Can you use escrow for rent? And can you use an escrow for rental deposits? The answer is yes, to both questions.
When you have a problem with an apartment or home you are renting, and your landlord refuses to address it, you can put your rent payments in escrow until the problem is fixed. This kind of action is a legal agreement. Putting rent into escrow means that you pay your rent to the clerk of court or some other government agency.
Under this system, the clerk of court releases the money in the home or apartment rental escrow account to the landlord after the home or apartment is repaired.
Read More: Landlord & Tenant Rental Agreements
Conditions for Using Escrow Rent Accounts
City ordinances usually give tenants have the right to escrow rent payments if the landlord fails to meet obligations required by the city's landlord/tenant law. You may also want to research your state’s laws on rent withholding.
Tenants can utilize an escrow account for renters if the landlord fails to live up to his end of the lease agreement, a government agency determines the rental home or apartment poses a health or safety hazard or it doesn't comply with the building code.
So, if you are dealing with such issues, it never hurts to escrow rent payments until they are fixed.
Procedure for Implementing Escrow Rental Agreements
Before a tenant can start putting rent into escrow, he must send the landlord a "notice to repair" letter that details exactly what needs to be fixed. The letter should be dated, sent by certified mail and the tenant should request a receipt as proof the letter was delivered to the landlord.
Usually, landlords get up to 30 days to make repairs after receiving the "notice to repair," but shorter timeframes are necessary for serious problems, such as no heat in the middle of winter or plumbing issues.
Making Rent Payments
Tenants must continue to pay rent during the 30-day waiting period after the "notice to repair" is sent and afterwards. Failure to pay rent will leave renters vulnerable to being evicted. Tenants who are current on their rent will have far more credibility with court officials in landlord/tenant dispute.
If the rent is not current, courts are likely to side with the landlord in the eviction process regardless of any complaints the tenant may have about the condition of the rental. And that could put you in legal and financial difficulty.
No Repairs After Notification
If the landlord makes no repairs 30 days after receiving the "notice to repair," tenants can start escrowing the rent. Tenants also can ask the clerk of court to order the landlord to either make the repairs, reduce the rent until the problem is fixed or allow them to use the escrowed funds to make repairs. If the problem is bad enough, a tenant may be able to terminate the lease agreement with no penalty.
Knowing your rights as a tenant and using an escrow rental agreement can make your life much easier even when you have a difficult landlord. So, it helps you to be aware of what they are and how to go about using an escrow for rent.
Read More: Can a Landlord Require You to Pay Property Taxes?
- Peoples-Law.Org: Rent Escrow: When the Landlord Fails to Make Repairs
- Nolo: State Laws on Rent Withholding and Repair and Deduct Remedies
- Nolo: Writing a Letter of Complaint to a Landlord About Health or Safety Concerns
- FindLaw: Landlords' Duties: Repairs, Maintenance, and Notice to Tenants for Entry
Tim Grant has been a journalist since 1989 and has worked for several daily newspapers, including the Charleston "Post & Courier," the "Savannah News-Press," the "Spartanburg Herald-Journal," the "St. Petersburg Times" and the "Pittsburgh Post-Gazette." He has covered a variety of subjects and beats, including crime, government, education, religion and business. He graduated from The Citadel with a Bachelor of Science in business administration.