The recent 11th Circuit Court of Appeals decision in MacNeil v. Bengal Properties, Inc., No. 24-11043 (Jan. 27, 2025) provides critical insights for Florida landlords regarding the imposition of early termination fees under Fla. Stat. § 83.595. This case underscores the limitations landlords face in charging tenants for early lease termination and highlights the potential risks of non-compliance. For landlords and property managers, understanding these legal boundaries is essential to avoiding costly disputes and lawsuits.
Background of the Case
Paul MacNeil and Patricia Rubio signed a residential lease with Bengal Properties, Inc. for a term running from August 2018 through August 2019. However, the tenants vacated the property early in December 2018 due to a job relocation. Bengal Properties subsequently attempted collection of over $6,000 in fees, including:
- A $2,400 early termination fee for breaking the lease.
- A $2,400 fee for failing to provide 60 days’ notice of termination.
The tenants argued that these charges violated Fla. Stat. § 83.595, which governs remedies available to landlords when tenants breach or terminate a lease early. They further contended that Bengal’s attempts to collect these fees violated the Florida Consumer Collection Practices Act (FCCPA), Fla. Stat. § 559.72(9).
Ultimately, the court ruled in favor of Bengal Properties, finding that the tenants failed to provide sufficient evidence that Bengal had actual knowledge the charges were illegitimate. However, the case’s focus on Fla. Stat. § 83.595 clarifies the statute’s application to early termination fees and reinforces the importance of compliance.
Key Takeaways from Fla. Stat. § 83.595
Fla. Stat. § 83.595 provides landlords with specific remedies when a tenant breaches or terminates a lease early. Importantly, the statute allows landlords to charge either:
- Liquidated damages (up to two months’ rent), or
- An early termination fee (up to two months’ rent).
However, landlords must adhere to these critical requirements:
- Written Addendum: Landlords and tenants must sign a separate addendum at the time the lease is executed, explicitly agreeing to the liquidated damages or early termination fee. Without this addendum, these charges cannot be imposed.
- Limitations on Fees: The statute caps both liquidated damages and early termination fees at a maximum of two months’ rent. Charging fees beyond this limit is impermissible.
- Notice Periods and Possession: If a tenant vacates the premises and the landlord retakes possession, the landlord cannot collect rent for the remainder of the notice period. The landlord’s remedies are limited to the agreed-upon liquidated damages or early termination fee.
Why This Case Matters
The MacNeil decision highlights several important principles for landlords:
- No Double Recovery: A landlord cannot charge both an early termination fee and rent during the notice period, and if the tenant has already surrendered possession to the landlord, the landlord cannot continue to charge for rent during the early termination notice period. This reinforces the principle that landlords are limited to one statutory remedy under F.S. 83.595.
- Compliance with Addendum Requirements: Bengal Properties’ ability to charge early termination fees hinged on whether their lease complied with the requirements of Fla. Stat. § 83.595, including the execution of a proper addendum. Failure to comply with these requirements could render the charges unenforceable.
- Actual vs. Constructive Knowledge: The FCCPA requires proof that a landlord “knowingly” attempted to collect illegitimate debts. Landlords cannot assume compliance; they must ensure their leases align with Florida’s landlord-tenant laws to avoid claims of improper collection practices.
- Risk of Litigation: Tenants can and do challenge improper fees in court. While Bengal Properties prevailed in this case (because the tenant could not prove “actual knowledge” of their violation of F.S. 83.595), the litigation process was undoubtedly costly and time-consuming. Avoiding such disputes requires proactive compliance.
Best Practices for Florida Landlords
To avoid the pitfalls highlighted in MacNeil, landlords and property managers should adopt the following best practices:
- Use Statutorily Compliant Leases: Ensure all leases include the required addendum for liquidated damages or early termination fees. The addendum must be signed by both parties and conform to the statutory language provided in Fla. Stat. § 83.595.
- Limit Charges to Two Months’ Rent: Under no circumstances should early termination fees or liquidated damages exceed the statutory cap of two months’ rent. Additionally, landlords should not attempt to collect rent during the early termination notice period after the tenant has surrendered possession of the premises to the landlord, and certainly not after the landlord has retaken possession of the property.
- Train Property Managers: Property management staff should be well-versed in Florida’s landlord-tenant laws, particularly the requirements of Fla. Stat. § 83.595. This includes understanding when and how to apply early termination fees.
- Document Everything: Maintain thorough records of all lease agreements, addenda, and tenant communications. In the event of a dispute, clear documentation can be the difference between prevailing in court or facing liability.
- Seek Legal Counsel: Before implementing lease provisions or collection practices, consult with an attorney familiar with Florida’s landlord-tenant laws to ensure compliance.
Fla. Stat. § 83.595
The MacNeil v. Bengal Properties case serves as a cautionary tale for Florida landlords and property managers. While the court ultimately sided with Bengal, the decision underscores the importance of adhering strictly to Fla. Stat. § 83.595. Landlords who fail to comply with the statute’s requirements risk not only losing the ability to collect fees but also facing potential litigation under the FCCPA.
By understanding and implementing the lessons from this case, landlords can protect their interests while ensuring compliance with Florida law. Properly drafted leases, statutorily compliant addenda, and a clear understanding of permissible remedies will help landlords avoid legal pitfalls and maintain positive relationships with tenants.