Property managers must know and obey laws relating to security deposit collection and maintenance.
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Anecdotal estimates peg the U.S. market for residential security deposits at more than $60 billion. Opportunities are ripe for fintech solutions in the administration of deposits. Independent security deposit management services can add value to professionally-managed real estate, while simultaneously bringing assurance and visibility to the process for tenants.
This month, Assurant and Deposify announced a partnership to simplify security deposit management.
As a global provider of housing and lifestyle solutions, Assurant offers a wide range of businesses and specialty lines, including end-to-end risk management dedicated to multifamily housing owners, aimed at reducing their risk exposure across the entire tenant lifecycle. The Assurant enterprise even provides surety bond products to their property management clients as an alternative for their residents at move in. Earlier this year, Assurant was named one of America’s Best Employers for Women by Forbes.
For Assurant’s property management clients, the new partnership ushers access to a tech platform built for efficient financial, operational and regulatory processes involving security deposits.
“Managing traditional cash security deposits is an incredibly inefficient process that places considerable burdens on landlords, property managers, brokers and tenants,” noted Steve Hein, senior vice president of Multifamily Housing at Assurant. “Our partnership with Deposify will help drive time and cost savings for property managers by using Deposify’s innovative solution.”
Deposify is an escrow-as-a-service financial technology company founded in 2014 in Ireland. Soon after, the venture sought accelerated growth through market expansion with a U.S. presence. One way to ramp up is to directly reach a customer base already attuned to the risk mitigation safeguards of its commercial partner.
“As one of the nation’s leading multifamily housing risk management providers, Assurant is the ideal partner for Deposify as we continue our expansion in the U.S. market,” said Founder and CEO Jon Bayle of Deposify in a statement. In addition to Dublin, Deposify now has offices in Boston and New York.
Bayle added about their partner, “Assurant brings deep real estate experience and market knowledge to our partnership, as well as distribution on a national scale.”
Managing security deposits is engrained in residential investment property operations. Security deposits are held as a guarantee for ensuring tenant performance under a lease. When a tenant has met all of the lease obligations, upon lease expiration the security deposit is returned in full to the tenant. However, over the life of the lease, it’s not as easy as money-clipping the cash deposit and locking it in a drawer.
Deposits are held separately from operating funds of the property, often in trust accounts for tenants. Some states require interest on the security deposit to be paid annually to the tenant. Security deposits interface with real estate management responsibilities, such as, property damage recovery; unpaid debts owed by the tenant like late fees and past-due rent; tax accounting; and tenant relations.
Administrative complexity grows with more rental units under management across multiple states with different regulations.
The harmonizing between Assurant and Deposify figures to pique the interest of not only Assurant’s clientele at participating apartment communities, but that of prospective customers, too, who’ll want to know where and when they can simplify.
“Our teams are beginning to work first with property managers in the Northeast and select other markets,” said Hein, “and will be expanding efforts throughout the U.S. during the remainder of the year.”