What is required from landlords regarding security deposits?

Landlords are required to keep security deposits in a separate account to ensure that the funds are treated appropriately and not co-mingled with operational funds. This practice protects tenants' money and provides clarity regarding the management of these funds. By maintaining a separate account, it becomes easier for landlords to account for and return the deposit when required, ensuring transparency and compliance with legal standards regarding the handling of security deposits. Additionally, this requirement prevents misuse of the deposit, safeguarding tenants' rights to reclaim their deposits under the terms outlined in the lease agreement and state laws.

The other options do not reflect standard requirements. Returning deposits regardless of lease violations could encourage lease non-compliance. Disclosing it in rental agreements is common practice but not universally mandated in every jurisdiction. Investing the deposit while held may not be required or could be subject to specific stipulations depending on state regulations.