Residential Security Deposits in Florida: A Landlord’s Guide for Retention of Deposits & Payment of Interest
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Security deposits are obviously one of the most important tools for landlords to protect their property when leasing it to a tenant. However, when accepting a security deposit, residential landlords must comply with Florida law governing how security deposit must be held and how the accrued interest is paid out to the tenant. If the landlord fails to comply with the applicable laws, the security deposit can quickly transform from a useful tool into a nuisance.
First, landlords in Florida are not required to hold security deposits in interest-bearing accounts. Pursuant to Florida Statute § 83.49(1)(a), landlords may elect to hold security deposits in non-interest-bearing accounts. When the landlord chooses that option, he must not co-mingle the security deposit with any other funds.
But, where the landlord holds a tenant’s security deposit in an interest-bearing account, the tenant is entitled to collect some of the interest accrued on the deposit. Pursuant to § 83.49(1)(b), the tenant shall receive either 75% of the annualized average interest rate payable on such account, or 5% per year, simple interest, whichever the landlord elects. The interest must be paid out to the resident at least annually, or it may serve as an offset to the tenant’s monthly rent.
Where the landlord offers leases in excess of 12 months, the interest should be paid on or before the one-year anniversary of execution of the lease, and then on the same day every year thereafter. For 12-month leases, the landlord should pay out the accrued interest when the lease terminates, when the tenant renews his or her lease at the end of the 12-month period, or, if the tenant has indicated in advance that he or she will not renew the lease upon expiration, credited against the last month’s rent payment. For those leases with a duration of less than a year, the accrued interest should be paid out when the lease expires.
Landlords should note that no interest is due to a tenant who wrongfully terminates his or her lease, pursuant to § 83.49(9).
Under § 83.49(2), where the landlord rents more than five individual dwelling units, and regardless of the length of the lease, within 30 days of receipt of the security deposit, the landlord must give the tenant written notice, sent by certified mail or hand-delivered to the tenant, and stating the following: a) the name and address of the bank where the security deposit is being held; and b) whether the tenant is entitled to interest on the deposit. The notice must also contain the following disclosure:
“YOUR LEASE REQUIRES PAYMENT OF CERTAIN DEPOSITS. THE LANDLORD MAY TRANSFER ADVANCE RENTS TO THE LANDLORD’S ACCOUNT AS THEY ARE DUE AND WITHOUT NOTICE. WHEN YOU MOVE OUT, YOU MUST GIVE THE LANDLORD YOUR NEW ADDRESS SO THAT THE LANDLORD CAN SEND YOU NOTICES REGARDING YOUR DEPOSIT. THE LANDLORD MUST MAIL YOU NOTICE, WITHIN 30 DAYS AFTER YOU MOVE OUT, OF THE LANDLORD’S INTENT TO IMPOSE A CLAIM AGAINST THE DEPOSIT. IF YOU DO NOT REPLY TO THE LANDLORD STATING YOUR OBJECTION TO THE CLAIM WITHIN 15 DAYS AFTER RECEIPT OF THE LANDLORD’S NOTICE, THE LANDLORD WILL COLLECT THE CLAIM AND MUST MAIL YOU THE REMAINING DEPOSIT, IF ANY.
IF THE LANDLORD FAILS TO TIMELY MAIL YOU NOTICE, THE LANDLORD MUST RETURN THE DEPOSIT BUT MAY LATER FILE A LAWSUIT AGAINST YOU FOR DAMAGES. IF YOU FAIL TO TIMELY OBJECT TO A CLAIM, THE LANDLORD MAY COLLECT FROM THE DEPOSIT, BUT YOU MAY LATER FILE A LAWSUIT CLAIMING A REFUND.
YOU SHOULD ATTEMPT TO INFORMALLY RESOLVE ANY DISPUTE BEFORE FILING A LAWSUIT. GENERALLY, THE PARTY IN WHOSE FAVOR A JUDGMENT IS RENDERED WILL BE AWARDED COSTS AND ATTORNEY FEES PAYABLE BY THE LOSING PARTY.
THIS DISCLOSURE IS BASIC. PLEASE REFER TO PART II OF CHAPTER 83, FLORIDA STATUTES, TO DETERMINE YOUR LEGAL RIGHTS AND OBLIGATIONS.”
Additionally, rather than place the security deposit into an interest-bearing or non-interest-bearing account, § 83.49(1)(c) allows the landlord to instead post a surety bond for the security deposit. In such instances, the bond must be executed by the landlord as principal as well as a surety company authorized and licensed to do business in Florida. The bond must be posted with the clerk of the circuit court in the county in which the real property is located, and must be in the total amount of the security deposits and advance rent the landlord holds on behalf of all tenants, or $50,000.00, whichever is less. When posting a bond, the landlord must pay the tenant annual interest in the amount of 5%. As where the deposit is held in an interest-bearing account, if the tenant has a 12-month lease, then the interest should either be paid out when the lease terminates, when the tenant renews his or her lease at the end of the 12-month period, or, if the tenant has indicated in advance that he or she will not renew the lease upon expiration, credited against the last month’s rent payment. If the tenancy is for less than 12 months, then the interest should be paid out at the end of the tenancy.
Where a landlord leases properties in five or more counties in Florida, § 83.49(1)(c) allows the landlord to post the surety bond with the office of the Secretary of State. The bond must be in the amount of the security deposits and advance rent held on behalf of all tenants, or $250,000.00, whichever is less. In this situation, the requirement to pay out 5% annual interest, and the timing thereof, remains the same as where the landlord leases properties in less than 5 counties.