Security Deposits in Florida

Landlords should familiarize themselves with the statewide regulations that govern security deposits in Florida and understand their responsibilities.

The Purpose of a Security Deposit

Security deposits acts as a safety net for landlords in the instance that tenants do not carry out their lease obligations and results in loss for the landlord. This allows a landlord to be compensated for any loss incurred from any damage caused by the tenant to the rental unit, or rent owed if a tenant vacates the rental property without first providing rent payment.

Allowable Security Deposit Charge in Florida

Florida Statutes 83.49 doesn’t establish a limit on a security deposit charge. Still, it’s always best to check if your city or county has an established security deposit limit. All Florida deposits are refundable.

Storing Security Deposits in Florida

Florida landlords have three options when storing security deposits in an account:

• A landlord can hold the security deposit in a non-interest-bearing account in a Florida banking institution. This is for the benefit of the tenant and not the landlord. The landlord should not commingle the security deposit with any other funds, or use any of that money until it’s due for something like tenant damage or expenses related to a breach of lease agreement (83.49 (1)(a)).
• A landlord can also keep the money in an interest-bearing account in a Florida bank. The tenant has a right to roughly 75 percent of the yearly average earned interest rate on the account or 5 percent of the yearly simple interest. The choice will be made by the landlord.  The money cannot be commingled with this option either, or used by the landlord before an amount is due for financial loss caused by the tenant (83.49 (1)(b)). Early termination by the tenant is a forfeiture of the earned interest.
• Surety bonds can also be posted by landlords in the amount of the security deposit charge (83.49 (1) (c)).

Security Deposit Rules & Regulations for Landlords in Florida

• Notice of Receipt of Security Deposit: The landlord has 30 days after collecting the security deposit to give notice of receipt, or provide a written notice in the rental agreement. The tenant must be informed in 30 days if the landlord has changed the location or manner in which the security deposit and the amount of interest gained on the account of any. This should be done by mail or in person. See Statute 83.49(a) (b) (c). This provision doesn’t apply to landlords fewer than five individual rental dwelling units.
• Allowable Deductions from a Security Deposit: A Florida landlord may deduct from the security deposit the following:
  • To cover unpaid rent
  • Monetary damage caused by the tenant’s breach of lease
  • For damage to the apartment in excess of normal wear and tear
  • Other violations of the lease agreement
• Applying Security Deposit as Last Month’s Rent:A security deposit is not meant to be applied to the last month’s rent. However, a tenant’s interest on a security deposit can be credited against the last month’s rent, although this cannot be done if the tenant wrongfully terminates the tenancy before the end of the rental term.
• How to Get a Full Refund: A Florida tenant can get their full security deposit back if after vacating the property the landlord finds that:
  • Tenant has fulfilled all the terms of the lease
  • Tenant has paid the rent in full and on time every month,
  • Tenant has left no financial obligation for the landlord to cover
  • Tenant has caused no damage beyond normal wear and tear
• New Property Owner’s Responsibility:The new buyer inherits the liability of refunding the tenant’s security deposit that may be owed to the tenant when the tenancy ends. The buyer should make sure that the previous landlord transfers all tenant deposits and notifies the tenants of the sale of the rental unit. See Statute 83.49 (7).

Returning Security Deposits in Florida

Rules for returning security deposits are discussed in detail in Statute 83.49 (3)(a). Below are important things to keep in mind:

• Time Frame: If a landlord is returning the full deposit, he or she has 15 days after the lease ends to do so, along with any interest earned on the security deposit. In the instance that deductions are made and a portion of the security deposit is withheld, a landlord has 30 days following the termination of the lease to send the tenant a written notice of this intention. The notice must be sent by certified mail to the address provided by the tenant.
• No Mailing Address: In the absence of a mailing address, the landlord doesn’t have to provide the tenant with written notice of the security deposit. Notify the tenant that the security deposit will be withheld, all or in part, and list the deduction and the charges. The tenant should be informed that there is a 15-day window after receipt of the letter to contest the decision and it should be done in writing. If there’s no objection from the tenant, the landlord can make the deduction and return the remaining portion of the security deposit to the tenant within a 30-day period from the time the initial written notice was given.
• Failure to Return a Security Deposit: If a Florida landlord fails to deliver a written notice to the tenant within 30 days, the landlord forfeits any right to the security deposit. See Statute 83.49 (3)(a) for the exact language on receipt notification.

“Normal Wear and Tear” vs. Damage

• “Normal wear and tear” is deterioration that occurs from the intended use of the rental unit and without negligence, carelessness, accident, misuse, or abuse of the premises or contents by the tenant, members of the household of the tenant, or the invitees or guests of the tenant. This includes minor issues, such as gently worn carpets, loose door handles, fading wall paint and flooring, stained bath fixtures, lightly scratched glass and dirty grout that occur naturally as a result of the tenant using the property as it’s designed to be used.
• “Damage” refers to destruction that occurs because of abuse or negligence by a tenant during the course of the tenancy and can affect usefulness, value, normal function of the rental unit. Pet damage (heavily stained and ripped carpet), broken tiles, hole in the wall, broken windows and missing fixtures are all examples of damage.

Security Deposits and Tax Filing in Florida

How security deposits are treated for tax purposes depends on whether or not a landlord retains or provide the tenant with a refund when the lease is terminated.

• Accounting for Security Deposits: Security deposits are treated as either assets or liabilities for tax purposes. It is not automatically rental income when it is received. Tenants shouldn’t deduct security deposits as expenses when filing and landlords shouldn’t declare them as income when in escrow with the intention of returning it to the tenant. Security deposits are not income until they become as such.
• Security Deposit Write-off:Usually, landlords cannot deduct security deposits when filing taxes as expenses before they are used for one purpose or another. If a landlord withholds part or all of the security deposit for unpaid rent, then that amount should be included as income for that year when filing taxes. Forfeited deposits should be declared as income on a landlord’s tax return. A deposit is taxable income only if and when a landlord has no obligation to refund the tenant.

Tips for Florida Landlords on the Right Practices for Security Deposits

• Charge a reasonable security deposit that can cover potential monetary losses that a tenant could cause
• Return security deposits within 15 days of lease termination if no portion is being retained, and return in 30 days if a portion is being withheld, with an itemized written statement of any deductions
• Withhold security deposits for any financial loss, damage or other expenses that are tenant’s liability
• Seek damages in legal proceedings if necessary to recover monies owed

Knowledge of Florida security deposit laws can help landlords and tenants to stay informed. Landlords can protect their assets and recover losses, and tenants can protect their rights. The laws can change so both parties should stay up-to-date on the statutes that govern security deposits in their state.

Make sure to refer to Florida Statute 83.49  for more on security deposits. Landlords should educate themselves on this topic to protect their rental property and avoid any legal trouble.

Read more about other landlord tenant laws in Florida