As a landlord in Florida, you have a right to charge your tenants a security deposit before allowing them to live in your rental.
A security deposit can protect the landlord and help mitigate risks. If a tenant, for instance, causes negligent or careless property damage during their stay at the property, you can make appropriate deductions from their security deposit to cover for repairs.
Here are some other reasons you can legally withhold part or all of a tenant’s deposit:
- If the tenant breaks their lease early: When a tenant breaks their lease, it means lost income for you. Luckily, you may be able to recoup your losses by making appropriate deductions to the tenant’s deposit.
- If the tenant stops making rent payments: Failure by a tenant to pay their rent is a serious lease violation. You may be able to cut your losses by making appropriate deductions on their deposit.
- If the tenant moves out without clearing their utility bills: Naturally, a tenant will be assigned some utility bills upon lease signing. And when moving out, if they have failed to pay them, you may make the appropriate deductions from their deposit.
In order to prevent landlords from improper use of their tenants’ deposit, Florida has a security deposit law in place. It’s contained in the statewide landlord-tenant law. As a landlord, understanding this law is crucial.
The following are answers to some commonly asked questions regarding security deposits.
1. Is there a limit to how much security deposit landlords can charge in the state of Florida?
No, Florida landlords don’t have a limit - they can charge any amount.
That said, most landlords realize the need to charge a reasonable amount. That’s because overcharging your tenants can increase vacancies as your unit will no longer be competitive.
2. How should landlords store their tenants’ security deposits?
As a landlord in Florida, you have 3 options when it comes to storing your tenant’s security deposit:
- You can store your tenant’s deposit in a non-interest bearing account. With this, you can't intermingle the tenant’s deposit with other funds.
- You can store your tenant’s deposit in an interest-bearing account. Like with the non-interest bearing account, besides storing it in a Florida bank, you must not intermingle it with other funds. In addition, you must give or credit the tenant 5% simple interest per year on the deposit amount. Alternatively, you must give or credit the tenant 75% of all the interest earned from the account.
- You can choose to post a security bond. The surety company must be licensed to operate in Florida. In addition, you must pay your tenant a 5% simple annual interest on the deposit amount.
3. Does the tenant have a right to receive a receipt for their security deposit?
Yes, once you receive your tenant’s security deposit, you must notify them immediately. The notice must be written and sent through mail or hand delivered.
In the notice, you must state the following information:
- The security deposit amount you have received.
- Where you are storing it, including the name and address of the banking institution holding it.
- How you are storing it.
- The amount of interest the tenant should expect from the deposit.
4. Are you required to do a walk-through inspection?
A walk-through inspection helps both the landlord and the tenant document the condition of the unit prior to the tenant moving out. It gives the tenant an opportunity to fix any violation to avoid deductions from their deposit.
In Florida, you are not required to do a walk-through inspection with your tenant before they move-out.
5. Does the landlord have a right to withhold part or all of their tenant’s deposit?
Yes. You have a right to make appropriate deductions from a tenant’s deposit.
- Fails to make their rent payments.
- Causes excessive property damage (examples of property damage include broken appliances or furnishings, unauthorized paint on the walls, and holes in the wall).
- Fails to clear their utility bills.
- Decides to break their lease early.
6. When should the landlord return the deposit back to their tenant?
Once a tenant has left, if you haven’t made deductions, you have 15 days to return their entire deposit. If you have made deductions, then you have an extra 15 days to return the remaining portion of their deposit.
In addition, you must also include all interest accrued on the deposit amount. Of course, the exception to this is if you stored their deposit in a normal account or posted the deposit as a bond.
If you wrongfully withhold a tenant’s deposit, you can face some consequences, such as losing your right to withhold any part of the deposit!
7. What happens if you sell your Florida rental property?
If you decide to sell your property, you must transfer the deposit (as well as the interest accrued) to the incoming landlord. You must also create a written receipt showing the amount of deposit you have transferred.
You will then be relieved of any responsibility regarding holding your former tenants’ deposits.
As a Florida landlord, it’s a good idea to charge your tenants a security deposit before allowing them to live in your rental. This can help to financially protect you and mitigate risks.
We hope this article was informative and helpful.
If you need more help or have any further questions, contact Ackley Florida Property Management today. We have been serving property owners in the Greater Orlando Metropolitan community since 1984.
Disclaimer: This blog is only meant to be informational. For expert help, please get in touch with us or a qualified attorney. We’ll be able to answer any questions you may have in regard to Florida security deposit laws.