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 a tenant's security deposit.
Asking for security deposits is a common requirement from landlords to act as protection when tenants commit a breach of contract or suddenly abandon the rental property. There are plenty of reasons that will be outlined below as to why they're so important.
As a property management company, we're here to help you be well-versed in the security deposit laws. If you’re a landlord in Miami, Florida, you can see the advantages of collecting security deposits.
The 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 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 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 security deposit will effectively buffer and lighten the landlord’s financial loss of losing a month's rent or more. The tenant also has the option to provide advance rent in the case that they want to pay for more than one month at a time.
- Protect loss in rental income. If a tenant moves out due to fortuitous events, the landlord has the right to deduct the amount of the lost rent from the security deposit he or she holds.
- 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 stay. The 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 move-out walk-through inspection is important. 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's Security Deposit Laws
1. Security Deposit Limit in Florida
According to the Florida security deposit law, the security deposit amount the landlord wants to collect 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.
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 official, but you'll have better luck finding tenants if you charge a reasonable security deposit and rent similar to comparable properties in the area.
As a property management company with years of experience in the industry, we'd recommend charging a security deposit amount that's equal to a month's rent.
2. Non-Refundable Fees
In Miami, Florida, the practice of nonrefundable fees depends on a landlord as per the Florida landlord-tenant law. 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 lease.
Unless otherwise stated in the lease, a tenant cannot use a tenant's deposit as advance rent payment.
3. Storing a Tenant's Security Deposit in Florida
The following are three ways a landlord can store a tenant's deposit in Miami, Florida. All three have to be kept in a Florida banking 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 security deposits collected unless the tenant violates the lease agreement.
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
A tenant can expect a share from the interest accumulated from the annual average earned in the account where the security deposit is placed. It can’t be combined with other funds.
A landlord cannot touch it before the amount is due. If a breach of contract occurs, a tenant will not be given their earned interest from the deposit.
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.
4. Written Notice after Security Deposit Receipt
In Miami, Florida, a landlord must notify the tenant via a written notice upon receiving the security deposit. It’s important that it is completed in 30 days from the recieval of the initial written notice. The following details must be shown in the 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 it’s contained in an account that is interest-bearing or not.
Any changes or movements of the security deposit must be disclosed to the tenant. 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 should exclude normal wear and tear.
- A loss that occurred when a tenant committed a breach of the lease contract.
- Payment for additional violations a tenant has committed in the terms and conditions of the lease.
- Cover for losses resulting from a tenant’s unpaid rent.
- If a tenant breaks the conditions of the lease
- Lease termination before its end date
6. Walk-Through Inspection
There’s no requirement for a walk-through inspection in Miami, Florida, but it can be useful if wanting to make a claim on a tenant's security deposit later. Again, this inspection cannot hold the tenant accountable for normal wear and tear.
7. Security Deposit Return in Florida
Under what circumstances must one return the security deposit? A landlord must observe the 15-day period when it comes to the refund of a tenant’s security deposit in Florida.
Since the tenant is entitled to the interest earned from an interest-bearing account, it should be added to the security deposit refund.
If the refund will only be given partially, a landlord must include a written list of deductions. This must be accomplished in 30 days or the landlord risks their claim to the percentage of the security deposit.
8. Change in Property Ownership
Should there be a change in property ownership in Miami, Florida, as the landlord you must notify of the tenant of the change in property ownership with a written notice. The new landlord will be responsible for the tenant’s existing security deposit. This new landlord will also shoulder the duties and responsibilities of the previous landlord.
If you're a landlord and you have specific questions about Florida's security deposit law 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. Laws frequently change, 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.