Florida is gaining more residents from domestic migration than any other state in the USA. With Florida having gained almost 319,000 new residents in 2022 alone, landlords have their work cut out to get everyone housed.
If you're one of the many landlords getting new tenants from outside Florida, refreshing the basics of security deposits may be worthwhile. Florida security deposit laws are sometimes very different from those in other parts of the country. This can have a significant impact on this property management practice.
Learn more about security deposits, their function, and their benefits in this handy guide.
1. Appropriate Limits for Security Deposits
No federal housing law sets a security deposit limit, so most States regulate the practice themselves. Florida, however, has no such limit, but that doesn't necessarily make it a good idea to charge a huge amount. Local governments can also impose such laws, but Jacksonville currently also leaves it up to the landlord.
One reasonable policy approach is to look at what other landlords in the area are charging. You can then charge a similar rate for your rental property in the spirit of competitive pricing. Another option is to set a fixed amount (two months' rent, for example) and adjust it higher or lower according to credit score, rental history, and similar factors.
2. Using a Separate Bank Account
In Florida, you must keep security deposits in a separate bank account. The bank you use must also be located in Florida. This rule makes disputes easier to resolve and makes the landlord's accounting much more manageable than if they were comingling the funds with their finances.
3. How the Money Becomes Yours
Unpaid rent or property damage (beyond regular wear and tear) entitles you to deduct and draw from the security deposit to make up the shortfall. If you do this, you must keep a record of the reason and communicate this (with evidence) within 30 days after the lease's termination.
4. Interest Consideration
When you choose the bank account for the security deposit, you can select a non-interest or an interest-bearing account. However, since the money is legally still your tenant's, all the interest also becomes theirs.
You may also not keep the interest even if you deduct the entire security deposit amount to cover shortfalls. For this reason, the best landlord advice is to go for a non-interest account to simplify the accounting aspect.
5. When to Return Security Deposits
You'll have 15 days to return the security deposit once the lease terminates. This is another reason not to use a high-yield account to keep security deposits in, as some of these may require a more extended notice period for withdrawals.
Property Management Makes it Easy
These are the five most essential aspects of security deposits in Florida that every landlord should know. Landlords can set their deposit amount, but it's best to price competitively. Landlords must use a separate bank account in Florida, and non-interest-bearing accounts work the best.
Deductions for property damage must be communicated within 30 days of the lease termination; otherwise, the deposit must be returned within 15 days. Managing all this can seem daunting, but property managers can help make your tenant management feel like a breeze. Contact PMI River City today and learn more about how we can handle all this and more for you.