Did you know security deposits are incredibly technical legal instruments designed to protect landlords and tenants? Many landlords (and probably most tenants) see security deposits as an alternate source of income, but that's not what they're for. They're meant to remedy certain contractual breaches for which tenants may be liable.
There are many legal rules governing how landlords must collect, hold, return, and withhold a security deposit in Fort Lauderdale, FL. Learn more about these rules and how they affect you in this quick guide.
Collecting and Storing Security Deposits
Fort Lauderdale (and Florida in general) places no legal limit on how much security deposit a landlord can collect. However, overcharging on a security deposit may scare good tenants away.
It's also best to avoid undercharging as it can leave you vulnerable in the event of a breach. In such cases, the landlord must claim through a small claims court rather than withholding the deposit. For this reason, the convention in Florida is to charge around one to two months' rent.
Florida law has more to say about storing security deposits than limiting them. Firstly, any security deposit you collect must go into your bank account. The bank you choose must be a Flordian banking institution.
The bank account does not have to be interest-bearing. However, if the deposit does accrue interest, you have to return at least 75% of the interest or return an amount equal to 5% annualized interest.
Steps to Effectively Manage Security Deposits
If you charge a security deposit, it's essential to do an initial inspection. Make a detailed checklist of the condition of the rental unit and all its appliances.
This step minimizes disputes since the tenants will be assured that you won't charge them for damage they never caused. It's also important to respond promptly to maintenance requests when tenants raise any such concerns.
Before your tenants leave, ensure that you also conduct an outgoing inspection. Comparing the initial list to the outgoing inspection will show whether you have any cause for withholding the deposit.
When and How to Withhold Security Deposits
You're only allowed to withhold security deposits for property damage and unpaid rent. The property damage must be beyond the wear and tear of everyday use (for example, the way carpets weather slightly over time).
If the tenants breach a term in the lease agreement and that causes you economic loss, you may also withhold the deposit. However, you need to provide tenants with an itemized list of reasons and proof if you withhold their deposit.
If that sounds like a lot, a new law also allows you to charge fees instead of a security deposit. This can reduce the upfront cost for tenants and can, therefore, make the listing a better option for some people.
Fixing Problems Related to Security Deposits
Security deposits are meant only to protect the landlord from tenant damage and unpaid rent. The rules involved are there to protect tenants from landlords who misuse the deposit convention.
Disobeying these rules can result in a landlord having to repay the whole deposit, even after damages. That's why you should work with experts in property management.
Since 1996, Metro Residential provides industry-leading services in Fort Lauderdale. Contact us today if you need help managing your security deposit or any other landlord responsibility.
