Lately, Eisinger, Brown, Lewis, Frankel & Chaiet has had to resolve many disputes relating to security deposits collected by our condominium associations from tenants who rent from individual unit owners.
It is standard procedure for many associations, if the authority to do so appears in their declaration or bylaws, to require a security deposit from a prospective tenant. This is separate and apart from any other deposit(s) that are paid directly to the landlord (i.e., first, last and security). Both transactions however must abide by guidelines stipulated in the Florida Residential Landlord and Tenant Act, Chapter 83, Florida Statutes.
The purpose for an association to require a security deposit from a renter is to protect against damages to the common elements or association property. The deposit must not exceed the equivalent of one month’s rent and be placed into an escrow account which the association is responsible for maintaining.
Florida Statute 718.112(2)(i) provides: “An association may, if the authority to do so appears in the declaration or bylaws, require that a prospective lessee place a security deposit, in an amount not to exceed the equivalent of one month’s rent, into an escrow account maintained by the association. The security deposit shall protect against damages to the common elements or association property. Payment of interest, claims against the deposit, refunds and disputes under this paragraph shall be handled in the same fashion as provided in part II of Chapter 83.”
When renting a unit, its typical for a landlord to request first, last and security deposits from a tenant. Instead of having the tenant pay an additional security deposit to the association, the landlord may just have the tenant remit one of those payments to the association as the required “security deposit.”
Oftentimes, however, problems arise when the tenant moves out or is evicted.
When a tenant remits the security deposit to the association, who is rightfully entitled to the deposit when the tenant moves out? Florida law requires that the deposit be returned to the person who issued the check, and no one else including the landlord (unless prior written consent to the contrary is provided). These funds are not reserved to protect a landlord for damages to the interior of its unit and a nonpayment of rent.
If things go sour and the landlord evicts a tenant, or they move out without paying back rent, the landlord may wish to place a claim on the association’s deposit. However, the statute prohibits this. An association is only allowed to return the security deposit to the lessee who initially placed the deposit, giving the landlord no recourse.
If a tenant is not responsible for any damage to common elements or association property, then he would be entitled to receive their full security deposit. If, however, the tenant caused damage to any of the common elements or association property, the association must take immediate steps and place a claim on the deposit. Pursuant to Fla. Stat. 83.49, if the association does not intend to impose a claim on the security deposit for damages to the common elements, the association must return the deposit within 15 days. Otherwise, the association has 30 days to provide the tenant written notice by certified mail of its intent to impose a claim upon the deposit and the reason(s) for imposing the claim. If the association does not follow these statutory requirements, the association forfeits its right to retain the deposit and must return the money to the tenant.
Education is key. It is critically important for associations and property managers to be aware of the statutory requirements associated with tenant security deposits. Eisinger Law regularly advises associations on how to establish strict guidelines for handling security deposits and requiring that the deposit check be issued only by the tenant and not the landlord or any other third party.
Claims against the deposit, refunds and disputes upon these deposits are handled pursuant to Chapter 83, Florida Statutes.
Carolina Sznajderman Sheir is an associate at Eisinger, Brown, Lewis, Frankel & Chaiet. She focuses her practice on real estate law, community association law, commercial litigation and developer representation. Contact her at firstname.lastname@example.org.