The most important thing to remember is that, in most situations, the money that you pay as a security deposit is still your money. Although you have to give up possession of the money and it seems like you no longer own that money anymore, you still have certain rights as to what happens to it. Under Florida Statutes (83.49) when money is paid by a tenant as security for performance of the rental agreement, OR, when any advance rent paid that is more than just the next immediate rental period, the landlord must hold the money as described by law. However, Florida law gives the landlord multiple options that he can choose from in order to meet this requirement.
First, the landlord can hold the money in a Florida banking institution account that does not generate interest. This means that the money paid as a security deposit cannot be commingled with the landlord's other money or used to fix up another property. Additionally, the landlord cannot pledge the account or in any way make use of the money until it is actually due to the landlord.
Next, the most beneficial to the tenant, the landlord can hold the money in a Florida banking institution account that does generate interest. In this scenario the tenant is entitled to 75% of the interest. Similarly, the landlord is still prohibited from being able to comingle the funds and cannot pledge the account or in any way make use of the money until it is actually due to the landlord.
Last, the landlord can hold the money in any manner he wants but must post a surety bond with the clerk of the circuit court in the county in which the rental property is located. The bond must be for the amount of the security deposit or $50,000, whichever is less. Additionally, if the landlord does post a surety bond he is also required to pay the tenant an interest rate of 5% per year, simple interest, on the amount of the security deposit.
No matter which option the landlord makes, if he rents more than 5 units, he is required to give a written notice to the tenant. This notice can be contained within the lease already or can be sent to the tenant within 30 days after receiving any advance rent or security deposit. The notice must be written and be given in person or mailed to the tenant. It also must include the name and address of where the money is being held, or state that the landlord posted a surety bond, and state whether the tenant is entitled to interest on the deposit. It must also contain a specifically worded disclosure that describes the parties rights to the deposit.
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