Commercial lessors holding security deposits in trust may face potential lawsuits from lessees for conversion [6fdef25a]. Recent legal cases and amendments to California's Money Transmission Act highlight the importance of understanding the legal implications of holding security deposits in trust [6fdef25a]. Lenders should consider including a double negative pledge in credit facility documentation for net asset value (NAV) credit facilities [6fdef25a]. This ensures that the lessor does not use the security deposit for any purpose other than its intended use [6fdef25a]. The availability of free access to articles from law, accountancy, and advisory firms, subject to registration and personal data sharing, is also mentioned [6fdef25a].
Starting January 1, 2024, landlords in Alberta will be required to pay tenants 1.6% annual interest on security deposits [959ac81d]. The interest rate is calculated by subtracting three percentage points from the ATB Financial interest rate for Guaranteed Investment Certificates (GICs) [959ac81d]. Landlords must pay the interest owed to tenants annually, unless both parties agree otherwise [959ac81d]. The interest on security deposits is typically a small amount, such as $32 for a $2,000 deposit [959ac81d]. Security deposits act as a safety net for landlords in case of property damage or unpaid rent [959ac81d]. This change aims to provide tenants with a financial benefit and ensure fair treatment in rental agreements [959ac81d].