How should a property manager handle tenant security deposits?

Security deposits are trust funds belonging to the tenant (subject to the lease and law), so a property manager must handle them carefully. State law generally requires that deposits be kept separate from the manager's own funds — often in a designated trust account — and accounted for accurately. At move-out, the deposit must be returned within the statutory time frame, less any lawful deductions for unpaid rent or damage beyond normal wear, usually with an itemized statement. Mishandling deposits, commingling them, or failing to return them properly exposes the manager and supervising broker to liability and discipline. Proper deposit handling is a core property-management and trust-fund topic at the broker level.