Where must security deposits for properties managed by a licensee be placed?

Security deposits for properties managed by a licensee must be placed in an escrow account designated specifically for security deposits. This ensures that the funds are kept separate from the licensee's personal or business funds, providing a clear and accountable management of tenant money that is meant for potential damages or unpaid rent.

Using an escrow account designated exclusively for security deposits helps to protect the tenant’s funds and comply with legal requirements surrounding the handling of such deposits. It assures tenants that their money is secured and will be properly handled, reflecting a professional standard in property management. This practice also facilitates transparency and trust in the landlord-tenant relationship, as it prevents any misuse of the funds by the licensee.

In contrast, placing security deposits in a savings account or in the property owner's hands can lead to confusion about the funds' purposes and may violate regulations regarding tenant protections. Storing deposits in the licensee's personal account is inappropriate since it mixes personal and client funds, which can lead to legal issues and a lack of transparency.