How to Hold Funds

In Florida, residential landlords are required to hold advanced rent (e.g. last month’s rent) and security deposits in a separate bank account (either interest or non-interest bearing) or post a surety bond. Landlords are not permitted to commingle the funds with the landlord’s other funds or make use of the money until actually due to the landlord. If an interest-bearing account is used, at least once a year the landlord must either pay the interest to the tenant or credit it against rent due, unless the tenant wrongfully terminates the tenancy before the end of its term.

Notice Requirements for 5 or More Units

A residential landlord who rents 5 or more individual residential dwelling units must provide written notice to tenants either in the lease agreement or within 30 days after receipt of advanced rent (e.g. last month’s rent) or a security deposit. The written notice must follow the requirements of Florida Statutes Section 83.49, which at this time state that the notice must: (1) be given in person or by mail; (2) state the name and address of the depository (e.g. the bank or financial institution) where the advance rent or security deposit is being held or state that the landlord has posted a surety bond as provided by law; (3) state whether the tenant is entitled to interest on the deposit; and (4) 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.

If the manner or location of holding the funds is changed, the landlord must provide the same notice within thirty days after the change. In addition, if the lease is renewed and security deposit carried forward, the notice must be provided again. If the property is sold or the designated rental agent is changed, all security deposits and advanced rents being held must also be transferred (including any interest earned with an accounting of the interest, if any) to the new owner or rental agent.

Implement Procedures to Follow Applicable Law

Residential landlords in Florida should implement a procedure to follow these statutory requirements for holding security deposits and advanced rent. Although it may take a little more time up front, it can avoid complications down the road. Review the current version of Florida Statutes Chapter 83, which is amended from time to time, and consult with an attorney to ensure you are following the most up to date requirements of the statute and all legal requirements that apply to your situation, which may vary depending upon the circumstances.

This blog post is for general information and education purposes only. It is not offered as legal advice or legal opinion. To the extent this message contains tax advice, the U.S. Treasury Department requires us to inform you that any advice in this article is not intended or written by our firm to be used, and cannot be used by any taxpayer, for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code. Advice from our firm relating to Federal tax matters may not be used in promoting, marketing or recommending any entity, investment plan or arrangement to any taxpayer.

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