At Bryant Taylor Law, we are dedicated to helping Florida real estate investors protect their investments. Part of this includes being aware of and mitigating ongoing tensions between Florida landlords and tenants.
In part one of our 3 part series, we addressed how rising rental costs are putting a strain on tenant-landlord relationships. Another cost associated with renting that’s been an issue is the handling of security deposits.
It’s often necessary to require tenants to provide a security deposit and/or advance rent in the event something happens to your property (aka your business). Consider asking the following questions about how you handle those deposits.
Where Are You Holding Security Deposits?
Florida law has specific requirements on how landlords hold security deposits for residential properties. For commercial properties, the rental agreement governs the handling of the security deposit. Statute 83.49(a)(b)&(c) detail the options landlords have to hold security deposits in residential properties:
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Deposited into a non-interest-bearing account with a Florida banking institution
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Deposited into an interest-bearing account with a Florida banking institution for the benefit of the tenant and NOT the landlord
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Post a surety bond with the clerk of the circuit court in the county where the property is located for the total amount of deposits or advance rent or $50,000, whichever is less, for the benefit of the tenant
For (a) and (b), no other money can be deposited into or withdrawn from the accounts. For (c), however, landlords who hold properties in five or more Florida counties can post a surety bond with the office of the Secretary of State for the total amount of all security deposits or advance rent collected or $250,000, whichever is less. All tenants governed under this surety bond will be owed 50% simple interest per year.
In (b), the tenant will collect the interest of at least 75% of the annualized average interest rate payable on such an account, or 5% simple interest per year, whichever the landlord chooses. In (c), the landlord will pay 5% simple interest per year to the tenant.
When and How Will Your Return Deposits?
Once you’ve decided how to hold the deposits, you’ll need a plan to return the deposit in a timely manner. If you plan to claim a portion of the deposit (repairs, damages, etc.), you have 30 days to notify the tenant by certified mail to the tenant’s last known mailing address. Otherwise, if you are returning the full deposit, you will have 15 days to return the deposit after the property is vacated after termination of the lease.
It’s important these detailed rules are followed. Failure to do so can result in litigation, and if you lose the lawsuit you can be responsible for the tenant’s attorney’s fees. For this reason, many attorneys target landlords in lawsuits when there is a dispute about the handling of the security deposit..
What Will You Use the Deposit for if It’s Not Returned?
Placing a claim on a security deposit will, of course, exacerbate the landlord-tenant relationship. This is sometimes necessary to protect and repair your property. No landlord should have to pay out of pocket for unnecessary and/or intentional damage to your business.
So, do you plan to use the unreturned deposit to improve the property? Keeping your Florida rental properties clean, repaired, and up-to-date goes a long way to protecting your reputation.
Ultimately, the guidelines surrounding security deposits are very stringent in Florida. Even the savviest real estate investors can get tripped up following them. If you have a tenant fighting back after a claim against a security deposit or are facing litigation resulting from your management of a tenant’s security deposit, contact Bryant Taylor Law and protect your investments.
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