Being a landlord is both financially rewarding and risky. On the one hand, you have a steady source of income. On the other, you may land bad tenants who cause lots of trouble or costly damage.
One way to protect yourself against potential expenses is by requiring a security deposit from your tenants. While you have every right to do so, you must ensure you follow Florida law to avoid any disputes.
Where to hold the money
The money from a security deposit must go into a separate account in a state banking institution. You can choose whether it is an interest-bearing account, but the interest goes to the tenant. Either way, you cannot commingle the money with other funds. Another option is to post a surety bond.
Once you receive the payment, provide the tenant with a notice of receipt within 30 days, as well as the location of the money and a specific disclosure concerning claims. The tenant must also know if you change where or how you keep the security deposit.
How to return the money
At the end of the lease agreement, you must return the deposit, along with any interest it earned, if applicable, if you do not plan to impose a claim. It is important to obtain a former tenant’s new address.
When to withhold the money
The point of the deposit is to provide you with security in case anything happens to the rental unit. Valid reasons to keep some or all of the funds include
- Damage beyond normal wear and tear
- Unapproved repairs or alterations
- Failure to clean upon moving out
- Nonpayment of rent
You have 30 days from the time your tenants leave to notify them of your intent to retain the deposit, including the damages and charges. If the tenants do not object within 15 days, you can deduct the necessary amount and then return any balance within 30 days of sending the notice. The tenant may later file a lawsuit. If you do not send the notice in time, you have to return the money and file a lawsuit instead.