The era of security deposits may end in Florida soon. In 2023, Florida Governor Ron DeSantis signed a law that allows landlords to charge a non-refundable fee in lieu of security deposits.
That doesn't mean you can ignore the concept, though. Landlords will still collect security deposits, which means in turn that landlords will have to know the law. If you're getting started as a new landlord, knowing how you must handle security deposits can protect you from expensive lawsuits.
If you want the basics on Florida security deposit law, keep reading and we'll walk you through this part of Property Management 101.
What Is a Security Deposit?
Security deposits give you a cushion against certain expenses you might incur as a result of having a tenant in a unit. You'll collect them at the same time your new tenant signs a tenancy agreement and conducts other move-in activities.
Once you do, your investments in the property itself now have security deposit protection. A renter's damage to your unit will not reduce its value in the long term. You must store the security deposit with a bank or acquire a surety bond rather than mixing it with your other funds.
Security Deposit Size
Florida places no restrictions on the maximum size of a security deposit. Most landlords charge at least one month's rent, capping out at about twice that. This gives both renter and landlord a reasonable cushion against charges when the tenant later moves out.
You will keep the security deposit for as long as the tenant continues to rent from you. If you have great tenants who renew their leases for years, you won't have to think about their security deposits for a long time to come.
What You Can Use Security Deposits For
Once a tenant moves out, you will conduct a walkthrough of the rental property. You can use the security deposit to pay for repairs related to damage beyond normal wear and tear. Broken tiles, damaged windows, and unauthorized painting represent common examples of security deposit uses.
You can also use the security deposit to cover unpaid rent. If a renter cannot or will not pay the rent for a month, you can choose to take that out of the security deposit.
If you do not intend to keep some or all of the security deposit, you must return it to the renter upon termination of the lease.
Alternatives Under Florida Law
As mentioned earlier, Florida landlords and property management companies can now collect a fee each month in lieu of a tenant's security deposit. Unlike security deposits, landlords do not need to refund these fees.
Long-Term Security
By collecting security deposits, you protect yourself and your tenants from later heartache over repairs. Tenants know that they may not receive the security deposit back if they damage the unit, and you have confidence that you'll have money for repairs.
If you feel like navigating holding security deposits or choosing alternatives could get challenging, contact PMI Biscayne Bay for a rental analysis. Our team has decades of experience in Florida real estate and can handle all accounting and financial needs for landlords of any size.
