No law in Florida requires landlords to ask a security deposit from their tenants. It’s entirely optional. But still, most landlords require a security deposit before a tenant can sign the lease agreement.
But why? A security deposit acts as a safety net against potential liabilities that can arise during a tenancy. Your tenant may, for instance, stop paying rent. If their reason for doing so isn’t legally justified, you may be able to withhold all or part of their deposit.
However, Florida landlords have a set of rules that they must adhere to in regards to tenants’ security deposits.
The following is a basic overview of the Florida security deposit laws. For more help, contact our team of professional property managers today!
1. Security Deposit Limit
Fortunately for you, Florida doesn’t cap the amount of security deposit you can ask a tenant. Despite this, savvy landlords are not keen to overcharge their tenants. In most cases, landlords usually charge the equivalent of 2X rent as security deposit.
So, if the rent amount is $1,500, most landlords will usually charge the equivalent of $3,000 as security deposit.
Overcharging tenants is never ideal, as it would cause prospects to look elsewhere for better prices. Requiring tenants to pay a maximum of 2X rent as deposit is sufficient to shield you against potential liabilities, such as vacancy and eviction costs. Ensuring the proper amount for a security deposit can make or break the success of your rental, especially if you are converting your home into a rental property.
2. Storing a Tenants’ Security Deposit
So, do Florida security deposit laws specify how landlords should store their tenant’s deposits? Yes. You have three options in this regard.
One option is to store the deposit in an interest-bearing account. In doing so, you must not commingle your tenants’ deposits with other funds.
The other option is to store the deposit in an interest-accruing account. You must then pay the tenant any interest accrued annually and at the end of the lease term. The following are some guidelines you must adhere to if you choose this option.
- Do not store the deposit with any other funds or use any part of that money for personal reasons.
- Pay the interest directly to the tenant or credit it back to the tenant as rent.
- The financial institution holding the money must be in the state of Florida.
The third and the final option is posting the tenant’s deposit as a surety bond. The surety bond must be posted in the same location the property is located. In addition, you must also pay the tenant 5% interest annually on the bond.
3. Written Notice after Receipt of Security Deposit
According to Florida law, landlords must notify their tenants in writing once they receive their deposit. This you must do within a period of 30 days. In the notice, you must state the following information.
- The name and address of the banking institution holding the tenant’s security deposit.
- Information on whether the tenant’s funds are being commingled or kept in separate accounts.
- The interest rate at which the deposit is being held in case you’re holding the tenant’s deposit in an interest-bearing account.
You must then deliver the notice to the tenant either by mail or in person.
And should you decide to move the deposit to another institution or change the terms at which it’s being held, you must again notify the tenant within 30 days.
4. Keeping a Tenant’s Deposit in Florida
As a landlord, you may be able to keep all or part of the tenant’s deposit for certain reasons. The reasons can be many and varied. They include:
- To cover for unpaid utilities once a tenant moves out. Tenants become responsible for certain utilities once they sign the lease agreement. When a tenant is moving out, they must make sure all pending bills are cleared. If they don’t, you can use part or all of their deposit to clear any outstanding bills.
- To cover for excessive cleaning costs. Most leases require their tenants to leave their rented premises in the same condition they found it, less allowable damage. So, if the tenant doesn’t, you can make appropriate deductions from their security deposit.
- Cover losses in rent payments. One serious breach to the rental contract is nonpayment of rent. Sadly, this is a common problem experienced by many Florida landlords. If this occurs, you may also be able to make appropriate deductions from the tenant’s deposit.
- Cover for lost rental income. A tenant may also choose to break their lease and move out before their term expires. Should this occur, you may also be able to cut your losses by making appropriate deductions from the tenant’s deposit.
- Cover excessive property damage. Excessive property damage is any damage exceeding normal wear and tear.
5. Walk-through Inspection
Some states require it while others don’t. Florida belongs to the latter group of states. As a landlord, you aren’t required to do a walk-through inspection prior to a tenant moving out.
6. Returning a Tenant’s Security Deposit
Once a tenant leaves, you have exactly 15 days to return the tenant’s deposit. You must also return any accrued interest, as well.
If you’ve made any deductions to the deposit, then you’ll have up to 30 days to notify the tenant of your intentions to keep part or all of their deposit. If you fail to notify the tenant, you forfeit any rights you have to keep any part of the deposit.
The tenant has a right to make objections to your claims. If they choose to move to court, the party that wins will be entitled to the sum awarded by the court, as well as attorney fees.
7. Sale of Property
If the property changes hands during a tenancy, you must transfer the deposit and interest accrued (if any) to the incoming landlord. You must also notify the tenant once the transfer has been successful.
Disclaimer: This isn’t a substitute for professional legal advice from an attorney. For further help, please consider hiring help from a qualified attorney or a professional property management company, like Gifford Property Management.