Orlando landlords can require that tenants pay a security deposit before they can sign the lease agreement. A damage deposit is always refundable back to the tenant once the lease ends, either partially or in full.
Landlords require tenants to pay a security deposit for various reasons. These reasons include to shield the landlord against financial losses from excessive property damage, missing rent payment, and failing to clear the bills before moving out.
Security deposit law in Florida is part of the statewide landlord-tenant law. As a landlord, it’s important to understand the ins and outs of Florida's landlord tenant law so as to avoid potential legal issues that may arise during a tenancy.
The potential stress associated with managing security deposits is one reason why many landlords in Florida turn to the assistance of an experienced property management company to help with security deposits, property upkeep, relationships with tenants, and so much more.
Let's take a look now at everything you need to know about managing security deposits as a landlord in Florida:
Overview of Security Deposit Law in Florida
Security Deposit Limit
In some other states, landlords are limited as to how much security deposit they can charge tenants. Take Arizona, for example. Arizona landlords can charge a security deposit not exceeding 1.5 times the monthly rent.
This is not the case in Florida. There is no law that caps how much security deposit you can charge tenants in Florida.
Nonetheless, make sure you charge them a reasonable amount, lest you risk long vacancy rates. Enacting fair policies is a way to ensure your tenants are happy, resulting in higher rates of lease renewal.
Storage of a Security Deposit
As a landlord in Orlando, you have three options to store a tenant’s security deposit.
You can store a damage deposit by posting a surety bond, depositing it in an interest-bearing account, or storing it in a normal bank account.
Receipt of the Security Deposit
As per Orlando's Landlord Tenant law, You must let your tenant know the moment you receive their security deposit. In the written notice, you must include three important details.
One: you must mention the name and address of where you’ve stored the tenant’s security deposit.
Two: be sure to mention the rate of interest the deposit is accruing if the deposit is stored in an interest-bearing account.
And three: mention whether you’re storing the funds separately or are combining them with others.
Also, you should let tenants know if you decide to change the banking institution holding their funds. This you must do within a period of 30 days.
Generally speaking, when a tenant moves out of a unit, they are required to return the property in its original state, saving for normal wear and tear.
Sadly, this does not always happen. And in such cases, the landlord will have a right to deduct appropriate amounts from the deposit to fix the issues.
The following table gives a summary of excessive property damage versus normal wear and tear:
Excessive Property Damage
Normal Wear & Tear
With that being said, are walk-in inspections mandatory in the state of Florida? While they're a good idea, they aren't required.
Withholding a Tenant’s Security Deposit
As a landlord, you have a right to withhold part or all of a tenant’s security deposit. This can arise as a result of several things. Including:
In the event the tenant breaks their lease early: A lease allows a tenant to stay in their rented premises for a certain period of time. If they break their lease early, you are entitled to part or all of the deposit. How much to deduct depends on the costs associated with the breach.
If the tenant fails to pay rent: Nonpayment of rent is a serious lease violation. You will be entitled to keep all or a portion of the deposit in case this happens.
In the event the tenant causes serious damage to the property: Note that you cannot charge your tenant for normal wear and tear. That’s because normal wear and tear occurs gradually as the property ages.
In case the tenant fails to pay utility bills at the time of moving out: Once a tenant signs a lease, they are often assigned some utility bills. And upon moving out, they must clear those bills.
Security Deposit Return
Once a tenant leaves, you must return part or all of the deposit within 15 days.
In case there are deductions to be made, then you’ll have an extra 15 days to return part of the deposit to the tenant. Failure to return the deposit back to the tenant in due time can have some repercussions, including forfeiting any right to make any deductions to the deposit.
It may also happen that the tenant objects to the deductions the landlord has made. In such a case, moving to court may seem like a logical solution. The court will then make its determination once both parties have provided their side of the story.
Sale of the Property
What happens when you decide to sell the property with an active lease agreement? The statewide security deposit law gives you two options.
One: you have the option to transfer the whole security deposit to the incoming landlord. The incoming landlord will then be responsible for notifying the tenant via a written notice of the same.
The notice must state several important things: the amount transferred, the holding banking institution, and the tenant's their name and address. Once this is done, the incoming landlord then becomes liable for keeping the tenant’s security deposit.
A second option is: to refund the tenant back their deposit. Of course, this can be whole or partial depending on the state the tenant returns the property in.
Disclaimer: This information is for education purposes only. For expert legal advice, please hire a qualified attorney or an experienced property management company.