Most landlords in Florida charge a security deposit. And rightfully so as it helps provide for a financial cushion against negligent actions by tenants. In addition, it also incentivizes tenants to care for their unit in order to get a full refund of their deposit.
Requiring a security deposit does, however, come with a slew of responsibilities for a landlord. Among other things, there are rules on how you can store it, how you can use it, and when you should return it.
It also goes without saying that noncompliance to these rules can come with some serious and costly repercussions. Whether you’ve just started renting out your home or are a seasoned landlord, here are the the things you should know about handling your tenant’s security deposit.
Are Landlords in Florida Limited in How Much Security Deposits They Can Charge Tenants?
No. The state of Florida doesn’t have any statute on the amount of deposit you can ask for from your tenant. Charging a reasonable amount is, however, advisable. Overcharging your tenants will only make your unit less desirable to prospective tenants.
Generally, a security deposit that’s equivalent to the rent of 1.5X the monthly rent.
How Must Landlords in Florida Store a Tenant’s Security Deposit?
Florida landlords have three options when it comes to storing their tenants’ security deposits.
Non-Interest Bearing Account
The first option, allows landlords to place the deposit in a non-interest bearing account. The account must be in a financial institution located in Florida, and there should be no commingling of the funds.
Interest Bearing Account
The second option, lets Florida landlords place the funds in an interest-bearing account. The financial institution holding the funds must also be located in Florida, and the account must not be used for any other purpose other than holding the deposit.
When it comes to the interest-earned, you’ll have two options, credit or give to the tenant 75percent of the interest earned from the account, or, pay the tenant a 5 percent simple interest annually on the amount of security deposit.
As a landlord you can also choose to post the deposit as a surety bond from a licensed company. Besides posting the bond, you must also pay your tenant 5 percent annual interest on the deposit amount.
Do Florida Landlords Have to Notify Tenants Upon Receipt of Their Deposit?
Yes, landlords in Florida have a responsibility to notify their tenants upon receipt of their deposit. You must deliver the written notice to the tenant either in person or via mail not later than 30 days after receiving it.
The notice must also state certain things. Including, the financial institution holding the deposit, the interest accruing (if any), and a state-issued disclosure. And should you change the manner in which it’s stored, you’ll have 30 days to notify your tenant.
Are Walk-through Inspections Mandatory in the State of Florida?
In some states, walk-through inspections are a must-have. This is, however, not the case in the state of Florida.
The purpose of a walk-through inspection is to document the property’s condition prior to the tenant moving out. If there’s any property damage, the tenant will have an opportunity to fix them prior to moving out.
When Can a Landlord Make Deductions to a Tenant’s Security Deposit?
As a landlord in Florida, you may be able to make deductions to your tenant’s security deposit for a number of reasons. They include:
- Unpaid rent. Payment of rent is a key renter responsibility. If they fail to pay it, that can amount to gross violation of the lease agreement.
- Cost of monetary damage resulting from the tenant’s violation of the lease agreement.
- Cost of repairing damage resulting from tenant negligence and not normal wear and tear.
- Charges allowed to be deducted under the lease. A good example is an early termination fee.
What is the Difference Between Normal Wear and Tear and Excessive Property Damage?
Security deposit deductions are a common source of conflict between landlords and tenants. A tenant may think they have complied with all lease requirements, but the landlord may disagree. Without a consensus, the matter can end up going to court.
Now, normal wear and tear is the gradual deterioration of a property. In other words, they are minor issues that occur as the property ages. Examples include lightly scratched glass, dirty grout, faded paint, and stained bath fixtures.
Damage, on the other hand, refers to destruction that occurs as a result of a tenant’s negligence or carelessness. Examples include missing fixtures, broken windows, hole in the wall, and broken tiles. These are the instances where you can hold your tenant liable for the damage and make the appropriate deductions.
When Should You Return a Tenant’s Security Deposit?
Once a tenant has vacated the premises, you’ll have 15 days to return their deposit. You must also send the accrued interest (if applicable) alongside the deposit you’re returning.
If there are deductions, you’ll have an extra 15 days to return the remaining amount to your tenant.
What Happens if You Wrongfully Withhold a Tenant’s Security Deposit?
Among other things, you may forfeit your right to make any deductions, as well as be liable for paying your tenant’s court costs and attorney fees.
What Happens if the Property Changes Hands During a Tenancy?
In Florida, there is only one option for outgoing landlords. That is, to transfer the deposit (plus any accrued interest) to the incoming landlord. If there are any deductions, you must provide an accurate accounting for the same.
Once you’ve done this, you’ll be relieved of any responsibility in regards to storing your tenant’s security deposit.
As a landlord you are responsible for following the proper secure deposit procedures and other guidelines under the states landlord-tenant laws. You should also be sure to familiarize yourself with the legal eviction process, lease termination policies, squatters rights and rent increase laws.
If you would like help managing your rental properties contact the expert team at Sun-Pro Realty and Management today!
Disclaimer: This blog isn’t a substitute for professional legal advice. Laws change and this post may not be updated at the time you read it. If you need further help, kindly contact a licensed attorney.