What Is a Security Deposit for a Rental Home in Kissimmee

In the Orlando area a long-term rental home security deposit, or simply a security deposit, is a sum of money paid by a tenant to their landlord at the outset of a rental application.

What Exactly Is a Security Deposit for a Rental Property in Kissimmee?

A security deposit is money a tenant gives to a landlord before moving into a rental property. This deposit serves as a financial safeguard for the landlord, covering potential damage to the property or unpaid rent.

State laws govern how much a landlord can charge and the conditions under which the deposit must be returned. Typically, a security deposit may be used to repair damage beyond normal wear and tear or to cover any missed rent payments at the end of the lease.

After the tenant moves out, landlords and property management companies must provide an itemized list of any deductions and return the remaining amount to the tenant within a specific timeframe, as state law dictates.

How a Security Deposit Works

A security deposit is a financial assurance for landlords when renting out a property. Before a tenant moves into a rental unit, they pay a security deposit, which is typically equivalent to 1 or 2 months’ rent. 

This deposit is held by the landlord during the rental period and may be used to cover any damages caused by the tenant beyond normal wear and tear or to offset unpaid rent.

When the tenant moves out, the landlord inspects the rental property for any damage. If repairs are needed or if there is any outstanding rent, the landlord may deduct those costs from the security deposit.

The remaining balance must be returned to the tenant, often within a set period defined by state law. The landlord is also required to provide an itemized list of any deductions made from the deposit. If the tenant disagrees with the deductions, they can dispute them, potentially leading to a resolution in small claims court.

Separate Trust Bank Account

Hold the total amount of such money in a separate non-interest-bearing account in a Florida banking institution for the tenant’s or tenants’ benefit. The landlord shall not commingle such deposits with any other landlord funds or hypothecate, pledge, or in any other way make use of such money until such money is due to the landlord or can be refunded to the tenants.

We hold all security deposits in a non-interest-bearing bank account. We find it easier and fairer for all to handle security deposits for our tenants who rent homes from us in Orlando, Kissimmee, St Cloud, and Davenport.

Rules About Interest-Bearing Bank Accounts

Hold the total amount of such money in a separate interest-bearing account in a Florida banking institution for the benefit of the tenant or tenants, in which case the tenant shall receive and collect interest in an amount of at least 75 percent of the annualized average interest rate payable on such account or interest at the rate of 5 percent per year, simple interest, whichever the landlord elects. 

The landlord shall not commingle such moneys with any other funds of the landlord or hypothecate, pledge, or in any other way make use of such moneys until such moneys are actually due the landlord.

Surety Bond

Post a surety bond, executed by the landlord as principal and a surety company authorized and licensed to do business in the state as surety, with the clerk of the circuit court in the county in which the dwelling unit is located in the total amount of the security deposits and advance rent he or she holds on behalf of the tenants or $50,000, whichever is less.

How Much Is a Security Deposit?

Generally, landlords often charge 1 month’s rent as a rental home security deposit and this is our standard practice at our property management company, unless your homeowners instruct us differently.

The amount of a security deposit typically depends on several factors, including state laws, the rental market, and the landlord’s policies. 

In some cases, landlords may require a higher security deposit, especially if the tenant has a lower credit score or if the rental property is furnished.

In Florida, security deposits must be held in a separate bank account, often called a trust or an escrow account.

Application Deposits vs. Security Deposits

Application deposits and security deposits serve different purposes in the rental process.

Application Deposits are typically a fee that a prospective tenant pays when applying for a rental property. This deposit demonstrates a serious intent to rent and may be used to hold the rental unit while the application is processed.

Application deposits are usually nonrefundable if the applicant decides not to rent the property after being approved. However, if the landlord rejects the application, the deposit should be refunded.

Security Deposits, on the other hand, are paid once the rental agreement is signed. This deposit acts as a financial guarantee for the landlord, covering any potential damages beyond normal wear and tear or unpaid rent during the lease term.

Unlike application deposits, security deposits are refundable, provided the tenant meets all the lease conditions and the property is returned in good condition. The landlord must return the security deposit, minus any deductions, within a specific period after the tenant moves out, as required by state law.

Security Deposits vs. Last Month’s Rent

The rental home security deposit and the last month’s rent serve two different purposes, even though both are collected at the start of the lease. The last month’s rent is exactly what it sounds like – it’s the rent payment for the final month of the lease term.

On the other hand, the rental home security deposit is the money the landlord holds as insurance against property damage or unpaid rent. While the last month’s rent is always used to cover rent, the security deposit is returned to the tenant at the end of the lease, minus any deductions for unpaid rent or damage repair costs.

Refunds of Security Deposits for a Long-Term Rental

Refunds of security deposits for a long-term rental depend on several conditions outlined in the lease agreement and governed by state law.

When a tenant moves out of a rental property, the landlord must inspect the unit for any damage beyond normal wear and tear and ensure all rent has been paid. If there are no outstanding issues, the landlord should return the full security deposit to the tenant.

If the landlord finds damages or unpaid rent, they may deduct these costs from the security deposit. For example, costs to repair damage caused by the tenant, clean the unit, or cover unpaid rent can be deducted.

The landlord is required to provide the tenant with an itemized list of any deductions made from the deposit.

State laws dictate the timeframe within which the landlord must return the security deposit, usually ranging from 14 to 60 days after the tenant moves out. If the landlord fails to return the deposit or provide a valid reason for withholding it, the tenant may have the right to take legal action, potentially filing a lawsuit in small claims court to recover the amount owed. 

Normal Wear and Tear

Normal wear and tear refers to the gradual deterioration of the property that happens over time with regular use. This can include minor wall scuffs, lightly worn carpets, or faded paint.

Damage, conversely, refers to significant harm to the property that affects its value, functionality, or lifespan. This can include large holes in the walls, crayoning on the walls, broken windows, or permanent stains on the carpet.

The Scope of Rental Home Security Deposits

Rental home security deposits in the Orlando area are not a universal fix for all the problems a landlord might encounter with a tenant. They primarily aim to cover the costs of significant property damage beyond normal wear and tear and unpaid rent.

For example, if a tenant were to leave large holes in the walls from hanging pictures or art, this would likely be considered willful damage that the landlord could use the security deposit to repair. On the other hand, minor scuffs on the wall from regular use would typically be considered normal wear and tear, which the landlord would not be able to deduct from the security deposit.

Best Practices for Long-Term Rental Security Deposits

Keep Documentation at Hand

Good documentation can save landlords and tenants from potential headaches and disputes regarding security deposits. Detailed records of the property’s condition at the start of the lease can provide a benchmark against assessing any possible damage at the end of the term.

This documentation can take several forms. A pre-move-in property inspection checklist with many photos of the property is a good starting point. This checklist should detail the condition of every part of the property, from the floors and walls to the appliances and fixtures.

In addition, photographs or video walkthroughs of the property can provide a visual record of its condition. These should be timestamped and stored safely. Both parties should have access to this documentation.

Transparent Communication

Clear and transparent communication is another crucial aspect of dealing with long-term rental security deposits. This is especially true when it comes to deductions from the deposit. Suppose a landlord plans to withhold part of the deposit to cover damages or unpaid rent. In that case, they should communicate this to the tenant, detailing the reasons for the deduction and providing any supporting evidence, like repair estimates or invoices.

Timely Return of Rental Home Security Deposits

The timely return of security deposits is not just a courtesy; it’s a legal requirement in many places. Landlords usually have a set period after the lease ends to return the security deposit minus any lawful deductions.

This time frame can vary depending on local laws, typically between 15 to 30 days. Landlords could face legal consequences if they fail to return the deposit within this time. Some jurisdictions may even require the landlord to pay a penalty for a late return.

A Word from Our Long Term Property Management Experts

Under Florida law, normal wear and tear is considered normal if the carpets have been there for a year or five years and are worn out.

We’ve had tenants live in a home for 7 years and left it perfect while occasionally people can live there a year and leave the place disgusting. It comes down to vetting properly, but that doesn’t always catch the applicant with good credit and employment but lives like a pig.

A good idea is to send them copies of the pre–move–in photos if you decide not to release them to them and tell them you expect it back in the same condition, minus normal wear and tear.

Tenants tend to love homes in good shape if they feel their maintenance issues have been addressed promptly during their tenancy.

If the property manager is nonresponsive, they will think they don’t care, so why should we. So, if your property manager doesn’t address your concerns, you can bet they don’t address the tenant’s concerns either, so cheap property management with a manager who ignores you is a recipe for disaster.     

FAQ

When Must the Security Deposit Be Returned?

The security deposit must be returned within a timeframe specified by state law, typically 14 to 60 days after a tenant moves out.

The landlord must provide an itemized list of deductions for any damages or unpaid rent. If the landlord fails to return the deposit on time or without justification, the tenant may seek legal action to recover the deposit.

What Can a Landlord Deduct From a Security Deposit?

A landlord can deduct costs related to property damage beyond normal wear and tear and if it’s stipulated in the lease, the landlord can use it towards any unpaid rent from the rental home security deposit. They cannot use it to cover the costs of ordinary repairs and maintenance.

Can a Security Deposit Cover the Final Month’s Rent?

A security deposit generally cannot cover the final month’s rent unless explicitly allowed in the lease agreement. The deposit is meant to cover potential damages or unpaid rent after the tenant moves out.

Using it for the last month’s rent could leave the landlord without funds to address damages. Always review the lease terms to understand the specific conditions regarding the security deposit.

Can A Security Deposit Cover Damage From Fires Or Thefts?

A security deposit typically cannot cover damage from fires or thefts, as these events are usually not the tenant’s responsibility. Instead, these damages are often covered by renter’s insurance or the landlord’s property insurance.

The security deposit is primarily used for damages caused by the tenant beyond normal wear and tear or to cover unpaid rent.

How Long Do People Need To Wait To Get Their Security Deposits Back?

Tenants typically wait 14 to 60 days to get their security deposits back after moving out. This period varies by state law and allows landlords time to inspect the property for damage and itemize any deductions before returning the remaining deposit to the tenant.

What Options Does A Tenant Have If A Landlord Or Property Manager Refuses To Return The Security Deposit?

If a landlord refuses to return the security deposit, a tenant can send a demand letter requesting its return. If unresolved, they may file a lawsuit in small claims court. Documentation of the property’s condition and any correspondence can strengthen the tenant’s case.

Are Long-Term Rental Security Deposits Refundable?

Yes, long-term rental security deposits are typically refundable. The landlord holds the deposit during the lease term and, barring any property damage or unpaid rent, should return it to the tenant at the end of the lease.

What Can A Tenant Do If They Believe Their Security Deposit Has Been Wrongfully Withheld?

If tenants believe their security deposit has been wrongfully withheld, they can take legal action. This often involves filing a claim with a local housing authority or in small claims court.

Are Landlords Required To Provide An Itemized List Of Deductions?

In many jurisdictions, landlords must provide an itemized list of any deductions made from the security deposit. This should include the specific reasons for each deduction and the associated costs. In Florida, we are required to provide the tenants with itemized deductions. Check your lease or with your property management company for further information, especially if you have pets.

In What Time Frame Long Must A Landlord Return The Rental Home Security Deposit?

The timeframe for returning the security deposit varies by jurisdiction, but it’s typically between 15 to 60 days after the end of the lease.

Can A Landlord Increase The Security Deposit After The Lease Has Started?

In most cases, the landlord cannot increase the security deposit after the lease has started unless there’s a provision for this in the lease agreement and it complies with local rental laws.