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Most state law requires landlords to deposit security deposits into individual designated security deposit bank accounts. The acccount bears the SSN of the tenant and not the landlord. No bank will allow you to open a new statement savings account without a Form W-9. It is used to open the bank account.
The W-9 form is actually a legal requirement in order to open an account for the security deposit. The security deposit goes in to an interest baring account, separate from the landlordâ€™s accounts. The bank reports this account to the IRS and that is the reason for asking for the W-9 form.
Mass General Law c. 186, sec. 15B(3)(a) provides:
(3) (a) Any security deposit received by such lessor shall be held in a separate, interest-bearing account in a bank, located within the commonwealth