Your tenants’ security deposits are not your money
When a Georgia landlord dies, tenant security deposits do not become estate money. They are trust funds under O.C.G.A. § 44-7-31. The escrow account holding them usually freezes at death. But the one month return deadline in § 44-7-34 keeps running. Only a successor trustee can sign on that account right away.
A security deposit is not rent. It is not savings either. O.C.G.A. § 44-7-31 tells you where to put it. Each deposit goes into an escrow account you open only for that purpose. It has to be at a bank the state or federal government regulates. You hold that money in trust for the tenant.
You also have to tell each tenant in writing where that account is. Most Atlanta owners cover this with one line in the lease. It is easy to do. It is also easy to forget when you switch banks or buy a new building.
Because the money is not yours, it should never pass to your heirs. That is only half the picture. Someone still has to be able to legally reach the account and send the money back.
What freezes the day an Atlanta landlord dies
Banks lock personal accounts when the owner dies. That includes a deposit escrow account in your own name. Every dollar in it belongs to tenants, and it still locks. The account does not vanish. It just stops accepting anyone’s signature.
Your buildings do not pause. Leases end. Tenants move out on the first of the month. New tenants pay new deposits. A 40 unit property in East Point can have three move-outs in the same week you die.
When no one can sign, a routine move-out turns into a claim against your estate. The tenant paid on time, followed the lease, and now gets silence. A frozen bank account is not a defense in a Georgia deposit case.
The same gap opens while you are still alive if a stroke or dementia takes away your ability to act. We cover that version of the problem in what happens to Georgia rental properties when you lose the ability to act.
Who can return a deposit right away, and who has to wait
Three different people could end up holding this duty. Only one of them can act on day one.
1
A successor trustee
Put your rentals and the escrow account in a funded revocable trust. Then the person you named becomes trustee the day you die. There is no court filing and no hearing. They can sign on the account and mail deposits on time.
2
An executor named in your will
A will names the person you want. It does not hand them any power. A Georgia probate court has to name them first. That takes weeks at best, and often months. Nobody can touch the account until then.
3
Nobody, because there was no plan
With no will and no trust, the court has to decide who is in charge before anything moves. This is the longest wait of the three. It runs at the same time every deposit deadline is running.
The one month clock keeps running after you die
O.C.G.A. § 44-7-34 gives a landlord one month to return the full deposit. The clock starts at the end of the lease or the day the tenant hands the unit back, whichever comes last.
If you are keeping part of it, you have to mail a written statement listing the exact reasons, along with a check for the rest. Nothing in that law pauses for a death in the family.
Missing the deadline costs your estate twice. O.C.G.A. § 44-7-35 covers the first hit. Send those statements late and you give up the right to keep any part of the deposit. That holds true even for damage the tenant really caused.
The second hit is larger. A landlord who fails to return money that was owed is liable for three times the amount plus the tenant’s attorney fees. Your estate can get that cut down to the plain amount, but only by proving two things. The mistake was not on purpose. And it happened even though you had a real system in place to catch it. A frozen account with nobody in charge is not a system.
Now multiply that by every unit that turns over while your family waits on the court. Those are the same months we price out in how much probate costs for Georgia rental properties.
The ten unit rule most Atlanta multifamily owners miss
O.C.G.A. § 44-7-36 holds a narrow exemption. It covers a person whose family owns ten or fewer rental units. Count the owner, a spouse, and minor children. Those owners skip the escrow account rule and the triple damages rule.
Two things cancel it. The first is size. One Atlanta apartment building puts you over the line by itself.
The second catches smaller owners who assume they qualify. You lose the exemption if someone else manages the units for a fee. Collecting rent counts. A property manager on a four unit building in Decatur is enough to lose it.
One duty never goes away. The one month return deadline applies to every Georgia landlord, exempt or not. So even a two unit owner leaves their family a hard deadline and a locked account.
Four steps that keep the deposit duty working
None of this requires new law or a fight with your bank. It requires four decisions made while you are healthy.
1
Move the rental property into a funded revocable trust
A trust only works if you sign the deeds over to it. Property still in your own name goes through probate. It does not matter what your trust document says.
2
Retitle the escrow account to the trust
Ask your bank to put the deposit escrow account in the name of the trust. This is the step that keeps it from freezing. It is also the one almost everybody skips.
3
Write down every deposit you are holding
Use one sheet per unit. List the tenant name, the amount, the date paid, and the bank account. Your successor cannot return what they cannot find.
4
Name a successor who can actually run property
Pick someone who can talk to tenants, sign checks, and work with your property manager. Naming a child who lives far away and has never seen the building is how good plans still fail.
A revocable living trust is what makes the first two steps possible. A full plan for a Georgia real estate investor runs $3,500 to $6,000. We break that number down in what estate planning costs a real estate investor in Georgia.
Deposits are one duty out of many that land on your family the same day. Start at our hub for Georgia real estate investors for the wider picture. Or read what an estate plan for a Georgia real estate investor includes.
