REPORT TITLE: 
Tenant Trust Accounts

DESCRIPTION:
Establishes tenant trust accounts into which all security
deposits deposited by or for a tenant with a landlord pursuant to
section 521-44, Hawaii Revised Statutes, shall be deposited.
Also directs that all interest or dividends earned upon sums
deposited into tenant trust accounts shall be returned to the
tenant.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                            412         
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                     A BILL FOR AN ACT

RELATING TO TENANT TRUST ACCOUNTS.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:


 1      SECTION 1.  The Hawaii Revised Statutes is amended by adding
 
 2 a new chapter to be appropriately designated and to read as
 
 3 follows:
 
 4                             "CHAPTER
 
 5                       TENANT TRUST ACCOUNTS
 
 6      �  -1  Tenant trust accounts established.  There are
 
 7 established tenant trust accounts into which shall be deposited
 
 8 all security deposits deposited by or for a tenant with a
 
 9 landlord pursuant to section 521-44.
 
10      �  -2  Required participation.  Every landlord that
 
11 receives a security deposit from a tenant pursuant to section
 
12 521-44, shall establish and maintain an identifiable interest-
 
13 bearing tenant trust account into which the landlord shall
 
14 deposit security deposit funds.
 
15      �  -3  Administration. (a)  Every tenant trust account
 
16 shall be established with a federally-insured and state- or
 
17 federally-regulated financial institution authorized by federal
 
18 or state law to do business in Hawaii.  
 

 
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                                     H.B. NO.           
                                                        
                                                        

 1      (b)  The security deposits in each trust account shall be
 
 2 subject to withdrawal upon request and without delay by the
 
 3 landlord or the management company of the property for which the
 
 4 security deposit has been deposited.
 
 5      (c)  The rate of interest payable on a tenant trust account
 
 6 shall not be less than the rate paid by the financial institution
 
 7 to regular depositors.  Higher rates offered by the institution
 
 8 to customers whose deposits exceed certain time or quantity
 
 9 minimums, such as those offered in the form of certificates of
 
10 deposit, may be obtained by a landlord on some or all of the
 
11 deposited funds; provided that there is no impairment of the
 
12 right to immediately withdraw or transfer the principal.
 
13      (d)  Every tenant trust account shall stand in the name of
 
14 the landlord and shall be clearly labeled and designated as a
 
15 tenant trust account established under this chapter.
 
16      (e)  The financial institution in which the tenant trust
 
17 account is established shall:
 
18      (1)  At the direction of the landlord or management company
 
19           in whose name the account is held, remit the principal
 
20           of the security deposit, and all interest or dividends
 
21           accrued on the average monthly balance in the tenant
 
22           trust account, or as otherwise computed in accordance
 
23           with the institution's standard accounting practice,
 

 
 
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                                     H.B. NO.           
                                                        
                                                        

 1           less reasonable service fees charged against the
 
 2           account at such time as the fees amount to no more than
 
 3           twenty-five per cent of the interest earned, to the
 
 4           tenant for whom the trust account has been established,
 
 5           subject to the provisions of section 521-44(c);
 
 6      (2)  Transmit with each remittance a statement showing the
 
 7           name of the landlord for whom the remittance is sent,
 
 8           the time period for which the remittance is made, the
 
 9           rate of interest applied, the total amount of interest
 
10           earned, the service fees assessed against the account,
 
11           and the net amount of interest remitted;
 
12      (3)  Transmit to the depositing landlord, at the time of the
 
13           transmittal in paragraph (1), a report showing the
 
14           amount paid to the tenant, the rate of interest
 
15           applied, the fees assessed, and the average account
 
16           balance for the period for which the report is made;
 
17      (4)  Charge no fees against a tenant trust account that are
 
18           unreasonable or greater than the fees charged to non-
 
19           landlord depositors for similar accounts; and
 
20      (5)  Collect no fees from the principal deposited in the
 
21           tenant trust account.
 
22      (f)  A landlord may deposit the security deposits of more
 
23 than one tenant into a single tenant trust account."
 

 
 
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                                     H.B. NO.           
                                                        
                                                        

 1      SECTION 2.  This Act shall take effect upon its approval.
 
 2 
 
 3                         INTRODUCED BY:___________________________