Collecting a security deposit when you’re a landlord is a common practice. Sometimes this can result in conflicts between you and a tenant. It’s essential to learn the Florida Security Deposit laws and the rights of both parties. That way you’ll know what to do should you find yourself in such a situation.
Definition of Security Deposit
A security deposit is a fixed amount that you can ask a tenant to pay aside from the advanced rental payment. It is refundable once the tenant vacates the rental property. It is also given to cover damages of the property while the tenant is living there.
Reasons for Security Deposit Collection in Florida
There are several reasons why you will require a security deposit from a tenant. Here are some of the common reasons:
- As coverage/protection against damages of the property
While staying in your rental property, a tenant may cause damage to the property. The security deposit is a safety net for you to cover expenses to replace or repair damages. This does not include coverage of normal wear-and-tear.
- Coverage of loss in case tenant fails to pay the rent
If a tenant vacates the property without paying their rent, a security deposit will cover this loss.
- Early termination of the lease
If a tenant breaches the lease early, a security deposit will help cover the costs of finding a new tenant.
- As coverage against unpaid utility bills when a tenant moves out
- As coverage for cleaning fees
You can use the security deposit to pay for the cleaning expenses in his property once a tenant moves out. This will ensure you can market your property well to fill the vacancy. You can also get in touch with a professional property management company in Florida like Cavalier Estates LLC to help you repair damages and fill vacancies. Give us a call at (813)344-0034 for more information.
Security Deposit Limit in Florida
Under Florida law, there’s no set limit for the security deposit you can collect from a tenant. Most landlords opt to ask for 1-2 months deposit as a maximum amount for a security deposit. If you ask for more than that, prospective tenants might find it too steep and opt to rent somewhere else.
Storing a Security Deposit in Florida
There are 3 ways Florida you can store a tenant’s security deposit:
1. Non-Interest-Bearing Account
You can store a tenant’s security deposit in a non-interest-bearing account. This means that the fund cannot be combined with other funds. It also means you can’t touch the funds. You can also use them if the tenant breaks the lease and you need it to pay for damage or other expenses.
2. Interest Bearing Account
You can store a tenant’s security deposit in an interest-bearing account. You are bound to pay the tenant around 75% of the annual average earned interest rate. Alternatively, it’s 5% of the simple annual interest. The fund cannot be combined with other funds nor touched before the amount is due. If the tenant terminated the lease early, they forfeit their earned interest.
3. Surety Bond
You must post a surety bond equivalent to the security deposit, or $50,000, whichever is lesser. When posting the surety bond, it must be done in your property’s county. You must also pay the tenant 5% annual interest from the bond.
Written Notice Requirement After Receipt of Security Deposit
Once you receive the security deposit from a tenant, you need to notify the client in writing. The notice must contain the following:
- The bank’s name and address where the tenant’s security deposit is kept
- Whether the security deposit is kept separate or mixed with other funds for the tenant’s advantage
- The interest rate of the tenant’s security deposit if it’s kept in an interest-bearing account
You have the choice of delivering the notice in person or by mail. Notify your tenant if you change the terms of the deposit or move it to a new location. You should do this within 30 days of receiving the security deposit.
The state of Florida does not require walk-through inspections. These involve you and the tenant assessing the condition of the rental property. Other states may require this, but not Florida.
Rental Security Deposit Refund Florida
Full Refund of the Security Deposit
In Florida, you have 15 days to return the security deposit to the tenant once the lease expires. If the deposit was in an interest-bearing account, the interest earned is included in the refund amount.
Partial Refund of the Security Deposit Due to Deductions
You have 30 days from the lease termination to inform the tenant in writing of any deductions that will be made from the security deposit.
The notice must contain the following:
- An explanation of the intent to retain a portion of or the entire security deposit. This must include an outline of your justification for this.
- Notification to the tenant that they have 15 days to challenge the claim upon receiving the letter. If they choose to do this, it must also be done in writing.
You must send the notice by certified mail to the tenant. The tenant must take care to leave a forwarding address for you to mail it to. If they don’t, you’re not required to produce a written notice to the tenant.
If the tenant doesn’t object to the claim on the security deposit, you can subtract the amount claimed. You must return any remainder of the deposit to the tenant within 30 days of the initial notice.
Should a tenant object, the situation could proceed to the court. The party that wins the case will receive the court awarded sum. The party that loses will have to pay the legal costs and fees.
This overview of the Florida security deposit laws is only informational. If you need more help, please seek professional services from a qualified Florida attorney.