How to Create Proper Security Deposit Procedures

Landlords must properly and timely handle security deposits in Florida. Otherwise, the landlord could lose any security deposit the tenant deposits for the faithful performance of the lease and potentially be sued by the tenant for improper or untimely claims. To be successful in this area of rental business, the landlord must create proper and effective procedures to make, process and handle security deposit claims and objections.

The following is a brief summary of procedures landlords can consider and implement in their rental practice.

1) Thoroughly Document the Condition of the Property Before Move-In

Landlords must thoroughly document the condition of the rental property before a tenant moves in. Otherwise, any claim in the future may be unsuccessful because the landlord simply does not have the evidence to prove that the tenant caused damages to the property. 

To thoroughly document the condition of the rental property, the landlord should consider the following:

  1. take photos of every aspect of every room of the home and notate pre-existing conditions;
  2. take photos of every aspect of the exterior of the home, including windows, roof, yard, garage door, sidewalks, pavement, etc., and notate pre-existing conditions;
  3. take careful note of any specialty items in or regarding the home;
  4. hire vendors to inspect and give condition reports on particular aspects of the home, including appliances and utilities;
  5. notate the manufacturer’s life expectancy or condition warranty on particular items, such as appliances, paint, A/C units, and carpets and flooring; and
  6. Make written notations of any notable conditions of the property that would relate to any future condition reporting or security deposit claims in the future.

As stated below, the landlord must gather and store all evidence in a way that makes future review efficient and organized.

2. Incorporate Proper Lease Provisions

The lease agreement should be drafted by a landlord-tenant attorney, for many reasons, one of which is so that the lease may properly obligate the tenant to pay for certain fees upon the happening of certain events. When the lease specifies fees to be paid upon the happening of certain events, it makes the tenant’s obligations clear and expressed and avoids the issues involving “damages beyond normal wear and tear”—a source of much litigation and contention in security deposit claims. 

For example, the lease may provide that the tenant is required to pay specific fees for (a) certain cleaning (e.g. carpet cleaning, house cleaning); (b) notice delivery fees (e.g. cure notice); (c) inspection fees (e.g. for tenant’s breach); and (d) trash removal. This way, upon the happening of the event, the tenant knows the specific amount owed to the landlord, and if the tenant fails to pay these fees before lease termination or as required by the lease, the landlord can make a claim for those unpaid fees on the security deposit. 

Additionally, the lease can provide for tenant’s obligations regarding the maintenance of the property, move-out procedures, and the payment of all money obligations incurred during the tenancy. Proper lease provisions will provide the landlord with legal grounds or support for making claims on the security deposit for monies owed by the tenant.

In Florida, courts uphold all lease provisions that are not contrary to the statute or unconscionable, so it would be prudent and smart for a landlord to use a lease prepared and approved by an experience landlord-tenant attorney. Do not try to do this yourself. It poses too many risks. 

3. Conduct Property Inspections During Lease Term

Landlords should perform a sufficient number of routine inspections of the property during the tenancy so that he may document and note the condition of the property and avoid issues of causation and mitigation that could otherwise arise. In addition, routine inspections give the landlord an opportunity to determine if the tenant is complying with the lease; mitigating any losses; and/or committing waste or causing damages to the property, which could potentially save the landlord thousands of dollars.

The same types of procedures that are conducted for pre-move-in inspection should be considered for routine inspections. Evidence should be collected and stored regarding the condition of every aspect of the property, so that the landlord may not only secure evidence for a subsequent claim on the security deposit, but also and potentially to deliver a notice to cure to the tenant (for breaching the lease or violating Florida law), or to order vendor services on the tenant’s account (e.g. for tenant’s failure to comply with lease obligations) and then to charge the tenant for those vendor services as “additional rent” (e.g. cleaning carpet or flooring) (assuming the lease agreement provides for this landlord remedy).

Of course, for the property manager, this gives him information sufficient to communicate the condition of the property to the home owner, and to avoid any potential allegations of breach of duty by the owner in the event the tenant damages the property.

4) Use Technology to Collect and Organize Evidence

Landlords should use available technology to gather and organize evidence concerning how the tenant is maintaining the property. At a minimum, landlords should take quality and sufficient digital photographs and videos of the property and upload them onto a cloud-based storage in such a manner as to make it easy for any professional who needs to review the files (such as the landlord’s attorney) to review the evidence and state a knowledgeable summation of the evidence.

The landlord should organize the files and categorize them into easily-identifiable methods. For example, name the cloud folders by the room name (e.g. living room, bedroom 1, master bathroom, etc.) and drop the relevant photographs and documents (e.g. invoice, receipts) files into that folder.

There are many systems that can be created to help the landlord to not only process security deposit claims, but also to assist any professional who will later review the evidence to make a determination on the evidence and respond to a tenant objection.

5) Conduct Thorough Move-Out Inspection

It perhaps goes without saying, but the landlord needs to thoroughly inspect the property upon the tenant’s moving out, just as with moving in and during routine inspections during the tenancy. This is the only way the landlord can know how to properly document and claim any damages caused by the tenant during the tenancy or for any fees owed due to a certain occurrence as required by the lease agreement.

6) Make Proper and Timely Security Deposit Claim

In Florida, the landlord must deliver a claim on the security deposit within 30 days of the vacate date upon termination of the lease. See Florida Statutes, section 83.49. If he fails to timely make a claim, the tenant is entitled to the entire deposit, even if the landlord has legitimate claims on the deposit.  (Of course, the landlord can still sue the tenant for damages, and as such, if the landlord fails to timely make a claim, he should hire an attorney to negotiate a settlement with the tenant to avoid litigation.)

To ensure the landlord has enough time to make a claim, the landlord should conduct all inspections necessary to make a claim timely. This may mean conducting all necessary inspections within, say, 7 days of the vacate date to give the landlord sufficient time, about 2 – 3 weeks, to get quotes and invoices of needed repairs and to calculate all other monies owed under the lease.

7) Hire Attorney To Respond to a Tenant Objection to Security Deposit Claim

Inevitably, tenants will object to a security deposit claim, even if he has no legitimate grounds to object. When this happens, legal issues arise, and the best way to resolve the dispute is for a landlord-tenant attorney to review the claims and objections and to write a response to the objection to the tenant. Otherwise, the landlord may face being sued by the tenant or his attorney needlessly. Costing both parties too much time and money. With the right attorney, the landlord can not only avoid costly mistakes, but also resolve disputes timely and effectively.