Compliance

FAQs

Frequently asked

Is Whale Deposit actually a security deposit?

Whale Deposit is not a “security deposit” in the traditional sense because the tenant does not hand over funds to the landlord.
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A traditional security deposit involves the tenant transferring money to the landlord, who then holds those funds for the duration of the lease. Whale Deposit operates as a credit hold within the tenant's own bank account, reserving the funds for any unpaid rent or damages due to the landlord at move-out.
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This approach allows Whale to fully guarantee the deposit amount to the landlord while allowing the renter to keep the money in their own bank account.

Does using Whale eliminate the need to follow security deposit regulations entirely?

No, using Whale Deposit does not completely eliminate the need to follow traditional security deposit regulations, but it does make it significantly easier for landlords to stay compliant since Whale assumes nearly all responsibility for compliance.
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Whale Deposit takes on the heavy lifting for nearly all aspects of deposit compliance, including:
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- Legal limits: We ensure deposit amounts never exceed state or local maximums.
- Separate accounts: Each deposit is held in a separate, dedicated account at a state-licensed institution.
- Interest-bearing: Renters earn interest 7x the national average.
-FDIC-insured: Each account is FDIC-insured up to $1,000,000.
- Transparency: The deposit location is immediately disclosed to the renter and they can log in to view their account anytime.
- Prompt returns: Deposits are unlocked instantly once the financial move-out is complete.
- Reminders: Whale alerts you if you're getting close to a state-imposed deadline for returning a deposit and haven't yet finished the financial move-out.
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As a landlord, your only responsibility is to conduct the move-out as you normally would:
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1. Inspect the unit and only deduct for charges legally allowed
2. Finalize the move-out statement and send it to the renter.

Is Whale legal in all states and jurisdictions where I operate?

Yes. Whale has contracted with several of the most well-respected law firms (Goodwin, Lowenstein Sandler, and Hudson Cook) to ensure Whale complies with all state and local regulations.
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In fact, Whale has been designed to surpass minimum legal requirements by (1) allowing renters to keep their deposit in their own account, (2) paying substantial interest to renters, (3) providing monthly account statements, and (4) significantly decreasing the time it takes to return deposits.
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Whale is also a Registered Investment Advisor (RIA) by the Securities & Exchange Commission (SEC). As an RIA, Whale is a fiduciary and legally obligated to comply with all local and state regulations.

Where are the funds for each Whale account actually held?

We partner with a network of FDIC-insured banking institutions across the country. This allows us to insure each individual Whale account up to $1,000,000 and pay interest 7x the national average.

Is Whale considered an escrow or trust account?

Yes, Whale Deposit is considered an escrow account due to its structure and the legal control mechanisms in place. Here’s why:

- Neutral Third-Party Control: Whale acts as a neutral third-party, non-operating fiduciary. Although the money remains in the renter's account, a signed agreement between the renter, the landlord, the brokerage of custody, and Whale legally gives Whale control over releasing the funds based on pre-set conditions.
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- Restricted Access: The funds within the locked Whale Deposit are explicitly not accessible or discretionary to either the landlord or the renter during the lease. This core principle of an escrow account ensures the funds are secure and can only be moved or accessed under specific, agreed-upon terms.
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- Conditional Disbursement: Funds are released directly to the renter or transferred to the landlord only after move-out charges are assessed and according to the specific terms outlined in the lease and Whale agreement.
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- Safeguarding Funds: By maintaining this controlled environment, Whale Deposit effectively safeguards the tenant's funds from potential misuse by the landlord, while simultaneously securing the landlord's right to lawful deductions for damages or unpaid obligations.

How does Whale prevent properties from exceeding deposit limits?

Whale allows properties to set both standard and conditional deposit amounts — either as a multiple of monthly rent or as a fixed dollar value. Behind the scenes, Whale continuously tracks state and municipal security deposit limits across the country and prevents the collection of deposits that would exceed the legal limit.

How does Whale make sure deposits are returned by each state's deadline?

As soon as you finalize the financial move-out, Whale instantly returns the remaining deposit to the renter by unlocking the funds in their account. No more worrying about printing and overnighting checks to make sure they arrive in time.
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Whale also proactively alerts properties as the time to return deadlines approaches, prompting timely inspections and finalization of move-out statements.

What is the Whale Zero-Risk Pledge?

If Whale mishandles a deposit*, we cover 100% of any resulting costs to you.
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We understand that navigating security deposit laws is complex and can be a source of significant risk for landlords. That's why we put our money where our mouth is: Whale will cover all costs associated with any legal penalties, fines, or damages you incur if our mishandling causes your non-compliance with security deposit regulations.

The Whale Zero-Risk Pledge

In the unlikely event of a mishandled deposit*, we cover 100% of any resulting costs to you.

* Mishandling is defined as any error or omission by Whale, intentional or unintentional, related to its control and management of the deposit funds, that directly causes you, the landlord, to be found in violation of a state or local security deposit regulation by a court of competent jurisdiction. It does not cover landlord-specific duties, such as conducting the physical move-out inspection before the state deadline, ensuring deductions are legally justified, and sending the move-out statement to the renter.

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Frequently asked

The Whale Zero-Risk Pledge

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