What Do Landlords Need to Know about Security Deposits?

What Do Landlords Need to Know about Security Deposits?

One bad tenant can make your job challenging and frustrating. That's why one goal most landlords have is to find excellent tenants. Excellent tenants make your job easier and help you make more money.

But you should still charge security deposits to every tenant. Before doing this, you must learn the laws in Florida. After all, knowing the law is the first step in following it.

There are a few laws relating to security deposits to know. Continue reading to learn these before renting to anyone.

Reasons to Charge a Security Deposit

Outsourcing tenant screenings is an excellent way to improve your tenant selection process. You can hire a property manager for this, but you should still require security deposits regardless of the tenant's quality.

The security deposit a person pays for a rental property gives you access to cash. It may not be enough to cover all the damage a tenant does, but it helps.

You can keep this money if a tenant breaks the lease, owes past-due rent, or damages the unit. Therefore, charging a security deposit is essential for every tenant. It's often your only recourse.

If you hire a property manager for help, they'll:

  • Collect security deposits
  • Handle lease renewals
  • Sign the tenancy agreement with new tenants
  • Repair and maintain the properties

These are a few benefits of hiring a property management firm, but there are others.

Limits for Security Deposits

Many states set laws on how much security deposit a landlord can charge. For example, some states limit it to one month's rent. Fortunately, Florida has no limits on security deposits.

This means you can charge as much as you'd like. You could even charge different rates depending on the tenant's quality.

Of course, you should carefully consider how much to charge before setting your rate schedule. You might have trouble finding tenants if you charge too much, and you could lose money by charging too little.

Storing the Money

Florida landlords must follow laws when storing money collected from security deposits. The primary law is that you must store the money in a separate account.

You have choices, including interest-bearing and non-interest-bearing accounts.

Returning the Money

Finally, you must follow laws when a tenant moves out and you return the money. First, determine whether you want to keep money from the security deposit.

If you want to keep some of the money, you have 30 days to notify the tenant about this action. You must send them a letter through certified mail.

You have only 15 days to return the security deposit if you plan to return the entire amount.

Protect Your Properties: Hire a Property Manager

Security deposits protect you from bad tenants, but they're only one form of protection. Hiring a property management firm gives you more protection and other benefits.

Do you need help with your rentals in Melbourne, FL? PMI Space Coast is a husband and wife team ready to help you with your rental properties. We provide management services for residential and commercial properties, focusing on excellence and transparency.

Reach out today to learn more!