H-4477              _______________________________________________

                                                   HOUSE BILL NO. 1912

                        _______________________________________________

State of Washington                              50th Legislature                              1988 Regular Session

By Representatives Locke, Nutley, Wineberry, Leonard and Nelson

Read first time 1/29/88 and referred to Committee on Ways & Means.

AN ACT Relating to funding the housing trust fund; and amending RCW 59.18.270, 59.20.170, and 43.185.100.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

        Sec. 1.  Section 27, chapter 207, Laws of 1973 1st ex. sess. as amended by section 1, chapter 233, Laws of 1975 1st ex. sess. and RCW 59.18.270 are each amended to read as follows:

          All moneys paid to the landlord by the tenant as a deposit as security for performance of the tenant's obligations in a lease or rental agreement shall promptly be deposited by the landlord in a trust account, maintained by the landlord for the purpose of holding such security deposits for tenants of the landlord, in a bank, savings and loan association, mutual savings bank, or licensed escrow agent located in Washington.

          ((Unless otherwise agreed in writing, the landlord shall be entitled to receipt of interest paid on such trust account deposits.)) With respect to all security deposits under leases or rental agreements entered into, renewed, or extended after the effective date of this 1988 section, a landlord shall place all security deposits that are nominal in amount or expected to be held for a short period of time in a pooled interest-bearing trust account.  A nominal or short term deposit is a deposit that would not, if placed in a separate account, produce positive net interest income after payment of bank fees, or other institution fees, and other administrative expenses.  The landlord shall direct the depository institution to pay at least every six months the interest on this pooled interest-bearing trust account, minus reasonable transaction costs, to the state treasurer to be placed in the housing trust fund established in RCW 43.185.030.   The landlord shall place all other security deposits in interest-bearing trust accounts with the tenant entitled to receipt of interest paid on such trust account deposits, minus reasonable transaction costs.

          The landlord shall provide the tenant with a written receipt for the deposit and shall provide written notice of the name and address and location of the depository and any subsequent change thereof.  If during a tenancy the status of landlord is transferred to another, any sums in the deposit trust account affected by such transfer shall simultaneously be transferred to an equivalent trust account of the successor landlord, and the successor landlord shall promptly notify the tenant of the transfer and of the name, address and location of the new depository.     The tenant's claim to any moneys paid under this section shall be prior to that of any creditor of the landlord, including a trustee in bankruptcy or receiver, even if such moneys are commingled.

        Sec. 2.  Section 12, chapter 186, Laws of 1979 ex. sess. and RCW 59.20.170 are each amended to read as follows:

          All moneys paid to the landlord by the tenant as a deposit as security for performance of the tenant's obligations in a rental agreement shall promptly be deposited by the landlord in a trust account, maintained by the landlord for the purpose of holding such security deposits for tenants of the landlord, in a bank, savings and loan association, mutual savings bank, or licensed escrow agent located in Washington.

          ((Unless otherwise agreed in writing, the landlord shall be entitled to receipt of interest paid on such trust account deposits.)) With respect to all security deposits under leases or rental agreements entered into, renewed, or extended after the effective date of this 1988 section, a landlord shall place all security deposits that are nominal in amount or expected to be held for a short period of time in a pooled interest-bearing trust account.  A nominal or short term deposit is a deposit that would not, if placed in a separate account, produce positive net interest income after payment of bank fees, or other institution fees, and other administrative expenses.  The landlord shall direct the depository institution to pay at least every six months the interest on this pooled interest-bearing trust account, minus reasonable transaction costs, to the state treasurer to be placed in the housing trust fund established in RCW 43.185.030.   The landlord shall place all other security deposits in interest-bearing trust accounts with the tenant entitled to receipt of interest paid on such trust account deposits, minus reasonable transaction costs.

          The landlord shall provide the tenant with a written receipt for the deposit and shall provide written notice of the name and address and location of the depository and any subsequent change thereof.  If during a tenancy the status of landlord is transferred to another, any sums in the deposit trust account affected by such transfer shall simultaneously be transferred to an equivalent trust account of the successor landlord, and the successor landlord shall promptly notify the tenant of the transfer and of the name, address and location of the new depository.  The tenant's claim to any moneys paid under this section shall be prior to that of any creditor of the landlord, including a trustee in bankruptcy or receiver, even if such moneys are commingled.

        Sec. 3.  Section 11, chapter 298, Laws of 1986 as amended by section 2, chapter 513, Laws of 1987 and RCW 43.185.100 are each amended to read as follows:

(1) The department shall have the authority to promulgate rules pursuant to chapter 34.04 RCW, regarding the grant and loan process, and the substance of eligible projects, consistent with this chapter.  The department shall consider the recommendations of cities and counties regarding how the funds shall be used in their geographic areas.

(2) The department shall also make rules and standards for calculating and collecting interest on tenant security deposits pursuant to RCW 59.18.270 and 59.20.170.  The department shall publish the dollar amount that is considered nominal or short term, and the department shall consider, but shall not be limited to: (a) The average interest rate paid by financial institutions on such individual deposits; and (b) the average cost of an individual trust account.  The department shall update this standard as the department deems necessary.

NEW SECTION. Sec. 4.     If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.