What is the main purpose of maintaining escrow records?

Maintaining escrow records primarily serves the purpose of holding security deposits. When a tenant pays a security deposit, it is crucial for property managers to keep these funds separate from their operating accounts to ensure transparency and fidelity to landlord-tenant laws. Escrow accounts must be managed carefully to reflect the total security deposits held, ensuring that funds are available for their intended purpose – to cover potential damages, unpaid rent, or other obligations as stipulated in the lease agreement.

An accurate escrow record provides a clear audit trail, which can protect both the tenant’s and landlord's interests. This practice is important not only for compliance with regulations but also to maintain trust between landlords and tenants. While an escrow account might be involved in managing repairs or tracking expenses indirectly, its primary function revolves around safeguarding security deposits.