Tips on handling security deposits
Q: My husband and I have purchased a few residential properties to lease. I am responsible for making sure that we do things legally and I’d like to know more about handling security deposits. I understand that deposits must be kept in a separate account “for the benefit of the tenant” but I’d like to understand what that really means.
A: Most landlords choose to keep the money in a separate account, although it is not the only option. If you post a surety bond for the amount of deposits, or $50,000 whichever is less, you can use the funds and commingle them with your own. If interest is paid on the account where the funds are held, the tenant must be paid either 75 percent of the interest paid or five percent interest. The choice is yours. This needs to be paid to the tenant at least once a year although it can be credited to the rent.
If you own properties in five or more counties, you would have to post your bond with the Secretary of State’s office. Landlords who have only one or two properties usually decide that this is more recordkeeping than the interest earned is worth.
Within 30 days after you receive the security deposits, interest bearing or not, you must provide written notice to the tenant in person or by mail. This notice should be titled “Notice of Holding Security Deposit” and must contain the name and address of the bank or any funds depository holding the funds; whether the funds will be held in a separate account or commingles with your own funds; whether the account is interest bearing; and a copy of the Florida Statute that governs this. This is Florida Statute 83.49(3) and can be found at www.StateOfFlorida.com.
You must return the security deposit and outstanding interest owed within 15 days after the tenant has moved out. Even if damage is done, the deposit must be returned unless you have sent a notice by certified mail informing the tenant in very specific language that you intend to impose a claim for damages. The language of the notice is “this is notice of my intention to impose a claim for damages in the amount of $xxx upon your security deposit, due to [list the reasons]. It is sent to you as required by Florida Statute 83.49(3). You are hereby notified that you must object in writing to this deduction from your security deposit within fifteen days from the time you receive this claim or I will be authorized to deduct my claim from your deposit. You objection must be sent to [your address].”
If the damages exceed the deposit, mention this in the notice in case you wish to file a small claims case for the difference. This is usually not worth the effort but you may want to obtain the advice of an attorney if the damages are substantial.
If you cannot find the tenant to return all or a portion of their security deposit, the money is considered abandoned and should be turned over to the State of Florida.
Attorney Sylvia Heldreth is a Certified Specialist in Real Estate Law. Her office is located at 1215 Miramar Street in Cape Coral.
This article is not intended as specific legal advice to anyone and is based upon facts that change from time to time. Individuals should seek legal counsel before acting upon any matter involving the law.