Each state has different regulations when it comes to handling security deposits and its security deposit laws. This article will cover the Florida security deposit law when it comes to any of your tenant's security deposits.
Asking for security deposits is a common requirement from Florida landlords to act as protection when tenants commit a breach of contract or suddenly abandon the rental property under the security deposit law. There are plenty of reasons that will be outlined below as to why security deposits are so important and why it is necessary for a Florida landlord to know them such as normal wear and tear.
As a property management company, we're here to help you be well-versed in Florida security deposit laws. If you’re a landlord in Miami, Florida, you can see the advantages of collecting security deposits.
As per Florida security deposit laws, the tenant's security deposit can:
- Protect Florida landlords by paying off a tenant’s unpaid utilities in case they move out of the property. As a landlord, you may experience a situation where tenants leave your rental property without fulfilling their obligation of paying their bills. A security deposit act as a reserve so you won’t be forced to use your own money to make the payment on behalf of the renter.
- Pay off cleaning bills. Even if most tenants are responsible for leaving a property in the same condition they found it, many don’t. To prevent the landlord from shouldering this burden, a tenant's deposit can be used to pay for the cleaning costs and maintenance that are not a result of normal wear and tear. This will help speed up the property showings for prospective renters.
- Lessen the impact of loss on rental payments. A tenant's security deposit will effectively buffer and lighten the landlord’s loss of such money for losing a month's rent or more. The tenant also has the option to provide advance rent in case they want to pay for more than one month at a time. This will cover expenses before an advance rental period commences.
- Protect loss in rental income. If a tenant moves out due to fortuitous events, the landlord has the right to transfer the amount of the lost rent from the security deposit they hold. As landlords require tenants to fulfill their responsibilities.
- Help pay for property repairs and fix property damage left by the tenant. Some tenants can be negligent and fail to abide by the terms of the lease agreement during their tenancy. The tenant's security deposit will aid the landlord in repairing and finding substitutes for the damaged items. If a landlord fails to provide evidence as to the state of the rental unit before the tenant's stay and the tenant objects to the claims, it is difficult to prove. This is why doing a move-in and a move-out walk-through inspection upon lease termination is important for a landlord. If you're going to impose a claim on the tenant's deposit for damages, make sure to have proof of such damages being caused by the tenant in question.
Here’s a Guide to Florida Security Deposit Laws
1. Security Deposit Limit in Florida
According to the Florida security deposit law, the security deposit amount the landlord wants to be paid from a tenant remains in their control. Florida landlords have the option to collect as little as a month or as much as three months if he or she desires to do so. The security deposit, no matter the amount, is kept by the landlord in a separate account.
However, Florida landlords must keep in mind that there's the risk that a tenant may be turned off if a tenant's deposit is too high. Florida security deposit limits may not be Florida law, but you'll have better luck finding tenants if you charge a reasonable security deposit and a month's rent similar to comparable properties in the area.
As a property management company with years of experience in the industry, we'd recommend following security deposit laws and charging a security deposit amount that's equal to a month's rent.
2. Non-Refundable Fees
In Miami, the practice of nonrefundable fees depends on a landlord as per the Florida landlord-tenant law and the landlord's intention. There’s no provision that it’s illegal to do so. If you're a landlord, it’s best to include and highlight nonrefundable fees in the rental agreement. A landlord's claim to nonrefundable fees should be written in the clauses of the signed, written lease.
Unless otherwise stated in the rental agreement, a tenant cannot use a tenant's deposit as advance rent payment. A landlord should keep track and a receipt for whatever they need to use tenant fees on.
3. Storing a Tenant's Security Deposit in Florida
The following are three ways a landlord can store a tenant's deposit in Miami. All three have to be kept by the landlord in a Florida financial institution that the tenant knows about.
A) Non-interest-bearing account
Having a non-interest-bearing account limits the tenant’s security deposit from being mixed with other funds. The landlord cannot touch the funds or security deposits collected unless the tenant violates the lease agreement. If a tenant fails to uphold the lease, a landlord can use the security deposit for damages incurred.
In such a situation, the security deposit may be utilized as payment for rental loss and property damages. A non-interest-bearing account has no interest rate.
B) Interest-bearing bank account
If a security deposit is stored in a separate interest-bearing account at a Florida banking institution, a tenant can expect a share of the interest accumulated from the annual average earned where the security deposit is placed. The deposit can’t be combined with other funds.
A landlord cannot touch the deposit before the amount is due. If a breach of contract occurs, a tenant will not be given their earned interest from the deposit money. If a tenant objects, you can always go to small claims court.
C) Posting a surety bond
The landlord must post a surety bond of $50,000. It’s also limited to where the landlord’s property is located and the interest accrued. As such, the tenant is further entitled to earn the 5% annual interest accrued that is generated from the surety bond. Placing the money in a bond is another way to gain interest from paid deposits for both the landlord and tenant.
4. Written Notice after Security Deposit Receipt
In Miami, a landlord must notify the tenant via a written notice, either through mail or handed to the tenant, upon receiving the security deposit. If landlords do not provide their tenant written notice, it's a breach of law.
It’s important that it is completed within 30 days from the receipt of the initial written notice. The following details must be shown in the written notice:
- Name of the financial institution and location where the security deposit is kept;
- Disclosure if the security deposit of a tenant is combined with other funds;
- And disclosure on the amount of the interest rate that will be earned and information whether the deposit is contained in an account that is interest-bearing or not.
Any changes or movements of the security deposit must be disclosed to the tenant in a landlord's notice. The landlord is obligated to provide written notice and it must not exceed 30 days.
5. Reasons to Withhold a Tenant’s Security Deposit in Florida
The conditions to withhold a tenant’s security deposit are the following:
- Property damage occurred and it must be fixed. This property damage should exclude normal wear and tear.
- A loss occurred when a tenant committed a breach of the lease contract.
- Deductions of payment for additional violations a tenant has committed in the terms and conditions of the lease.
- Cover for losses such as utility bills or court costs resulting from a tenant’s unpaid rent.
- If a tenant breaks the conditions of the lease or Florida law
- Lease termination before its end date. Landlords can even impose an early lease termination fee.
6. Walk-Through Inspection
Under Florida landlord-tenant laws, there’s no requirement for a walk-through inspection in Miami, but it can be useful if Florida landlords want to make a claim on a tenant's security deposit later. Again, this walk-through inspection cannot hold the tenant accountable for normal wear and tear, but it can help the landlord make clear renter expectations regarding security deposits.
7. Security Deposit Return in Florida
Under what circumstances must a landlord return the security deposit according to the security deposit law? A landlord must observe the 15-day period when it comes to the refund of a tenant’s security deposit.
Since the tenant is entitled, by Florida statute, to the interest earned from an interest-bearing account, it should be added to the security deposit refund. If the rental unit is in proper shape, the landlord must return the security deposits to the person they got it from.
If the refund will only be given partially, a landlord must include a written list of deductions, including all the repairs the security deposit paid for. This must be accomplished in 30 days or the landlord's claim to the percentage of the security deposit may be at risk.
8. Change in Property Ownership
Should there be a change in property ownership in Miami, Florida, as the landlord you must deliver the notice by certified mail to the tenant regarding the change in property ownership with an initial written notice under the security deposit law.
The new landlord will be responsible for the tenant’s existing security deposit during their stay in the rental property. The incoming landlord will also shoulder the duties and responsibilities of the previous landlord.
If you're a landlord and you have specific questions about Florida security deposit laws or Florida landlord-tenant laws, hire the services of a qualified attorney. Alternatively, you can seek help from a knowledgeable property management company.
Kindly note that this blog should not be used as a substitute for legal advice from a licensed attorney in Florida. Florida statutes frequently change like those listed as the security deposit laws, and this post might not be updated at the time of your reading. Please contact us for any questions you have in regard to this content or any other aspect of your property management needs.