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The Leasing Hotline
Commingling Security Deposit Funds
A landlord may be required to refund security deposits with interest where the landlord fails to deposit the security deposits into a segregated account. Indymac Bank, F.S.B. v. National Settlement Agency, Inc., et al, 07 Civ. 6865 (LTS)(GWG), United States District Court for the Southern District of New York, Aug. 14, 2008.
In April, 2007, the landlord and tenant entered into a lease agreement for commercial office space within a building. The tenant provided the landlord with two security deposit checks, and the landlord deposited those checks into a general operating account rather than a segregated account. Thereafter, the tenant obtained an Order of Attachment against the landlord's assets up to the sum of $2,349.150.00. The tenant then filed a motion seeking an order requiring the landlord to return the security deposits, arguing that because the landlord did not keep the deposits in a segregated account, but instead commingled the funds with general funds, the landlord forfeited its right to those deposits. The court granted the motion, holding that because the landlord had a duty to segregate the funds as a trustee of the funds, under New York law the tenant had a right to a return of the funds, with interest
Commingling Security Deposit Funds
A landlord may be required to refund security deposits with interest where the landlord fails to deposit the security deposits into a segregated account. Indymac Bank, F.S.B. v. National Settlement Agency, Inc., et al, 07 Civ. 6865 (LTS)(GWG), United States District Court for the Southern District of
In April, 2007, the landlord and tenant entered into a lease agreement for commercial office space within a building. The tenant provided the landlord with two security deposit checks, and the landlord deposited those checks into a general operating account rather than a segregated account. Thereafter, the tenant obtained an Order of Attachment against the landlord's assets up to the sum of $2,349.150.00. The tenant then filed a motion seeking an order requiring the landlord to return the security deposits, arguing that because the landlord did not keep the deposits in a segregated account, but instead commingled the funds with general funds, the landlord forfeited its right to those deposits. The court granted the motion, holding that because the landlord had a duty to segregate the funds as a trustee of the funds, under
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