How to Create Security Deposit Procedures

Landlords in Florida must handle security deposits in a proper and timely manner. 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 the rental business, a landlord must create proper and effective procedures to make, process, and handle security deposit claims and objections.

Security Deposit Tips and Procedures

The following are tips and procedures landlords can consider and implement in their rental practice.

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 any 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 any 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.

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

Incorporate Proper Lease Provisions

There are many reasons a lease agreement should be drafted by a landlord-tenant attorney, one of which is so that the lease may properly obligate the tenant to pay for certain fees in specific events. This makes the tenant’s obligations clear and expressed, and avoids 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 the 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 intelligent for a landlord to use a lease prepared and approved by an experienced landlord-tenant attorney.

Conduct Property Inspections During the Lease Term

Landlords should perform routine inspections of the property during the tenancy so that they 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 inspections 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 potentially to deliver a notice to cure to the tenant, 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 (e.g. cleaning carpet or flooring) as “additional rent” (assuming the lease agreement provides for this landlord remedy).

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

Use Technology to Collect and Organize Evidence

Landlords should use available technology to gather and organize evidence concerning how the tenant maintains the property. At a minimum, landlords should take quality and sufficient digital photographs and videos and upload those files onto 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 restate a knowledgeable summation of the evidence.

The landlord should organize the files and categorize them into easily-identifiable methods. For example, name 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) into that folder.

Another example is to create methods that make it easy for any future viewer of the files to know what photos he is looking at, in what room, and at what damage. One method may be to take a photo of a colorful cardstock with the name of the room (e.g. living room) to identify the room in which photos are being taken; and then, take all the photos for that particular room. That way, all photos will be taken in sequence and easily identifiable in the computer folders, even from a “thumbnail” view of those photos.

The landlord could also create a system whereby each wall, in each room, is identified by a number (e.g. wall 1, wall 2, wall 3), so that when there are photos taken of walls in particular rooms, the landlord can, for instance, post a sticky-note on the wall (e.g. near the damaged portion) to identify which wall was damaged and where. This type of system can help the landlord process security deposit claims and assist any professional who will need to review the evidence to make a determination and respond to tenant objections.

Conduct Thorough Move-Out Inspections

The landlord must thoroughly inspect the property upon the tenant’s moving out, just as they would with moving in and 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.

Make Proper and Timely Security Deposit Claims

In Florida, the landlord must deliver a claim on the security deposit within 30 days of the vacate date upon the termination of the lease (see Florida Statutes, section 83.49) If a landlord fails to make a timely 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 make a claim in a timely manner, they 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, they should conduct all inspections necessary to ensure a claim is 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.

Hire Attorney To Respond to Tenant Objections to Security Deposit Claims

Inevitably, tenants will object to a security deposit claim, even if they have no legitimate grounds to object. When this happens, legal issues often arise, and the best way to resolve the dispute is for a landlord-tenant attorney to review the claims and objections, then write a response to the tenant’s objections. Otherwise, the landlord may needlessly face being sued by the tenant or their attorney, costing both parties time and money. With the right attorney, a landlord can not only avoid costly mistakes but also resolve disputes in a timely and effective manner.