Most landlords do their best to avoid the nightmare tenant scenario - someone who refuses to pay and wreaks havoc on their property.
However, everyday property problems aren't so easily dodged: The tenant who accidentally burned a hole in the carpet or damaged a wall trying to carry furniture up curved stairs.
Avoiding the small stuff is important because the costs can affect your real estate profits. That's why setting a security deposit is vital - it's your safety net.
Read on to learn the facts about setting security deposits in Florida.
You Have a Timeline for Refunding Deposits
When a tenant leaves your property after a lease has ended, you are responsible for returning their security deposit. However, it's worth noting that laws in Florida govern the timescales for this return.
You must hand the security deposit back within 15 days of your tenant departing.
If there are deductions, you have 30 days from the tenant leaving to itemize these and send the details to your tenant. Failing to do so could leave you open to a legal claim from your tenant.
You Must Follow the Law Over Deductions
You must maintain fairness when deducting from a security deposit and follow Florida state law.
An example of a fair deduction is to cover any unpaid rent. However, you should show evidence of this with an accurate record of payments from your tenant.
Suppose the tenant has violated specific rules in your lease, such as making a structural change to the property. In that case, you can make deductions for this, too.
Security Deposits and Earning Interest
When you hold a security deposit, you'll have money in a bank account that can theoretically earn interest. But since that's your tenant's money, Florida law also outlines rules about how you treat any earnings from interest.
If you hold the tenant's deposit in an interest-earning account, you must pass 75% of those earnings to the tenant. Alternatively, you can pay the tenant a fixed rate of 5% a year on that deposit.
The Average Security Deposit
Typically, landlords charge one month's rent as a security deposit.
However, you may want to charge more in unique circumstances where you are taking on more risk. For example, landlords often ask for an additional deposit if the tenant has a pet.
Keep Documentation Organized
When accepting a security deposit, you must stay organized and provide a receipt for all payments.
Good record-keeping for security deposit transactions and amounts is vital, which means holding onto letters, emails, or other correspondence. You may need this if there are any disputes in the future.
Ensure your lease agreement includes information on deposit amounts and terms for returning it to the tenant after they leave.
Security Deposits in Florida: Understanding the Law
As a landlord, it's essential to realize that security deposits are more than a traditional practice. They come with legal protections for the tenant, which means knowing all about the law for security deposits in Florida.
Getting help with the admin side of tenant management can make a big difference to landlords.
At PMI Beach Properties in Florida, our experienced teams can oversee your lease management, leaving you free to focus on your property investments instead. Find out more here.
