SECURITY DEPOSIT DEDUCTIONS

A security deposit is collected under most residential leases, and in most of those situations, the manager will seek to make at least some claim against the security deposit after the tenancy has concluded.

Statutory Definition

Florida Statutes 83.43(12) defines security deposits to mean “any moneys held by the manager as security for the performance of the rental agreement, including, but not limited to, monetary damage to the manager caused by the resident's breach of lease prior to the expiration thereof.” Florida Statutes 83.49 permits the manager to impose a claim on the security deposit and sets forth the procedure to do so. Thus, the manager can impose a claim on the security deposit, not only for physical damage claims, but for any failure in the performance of the rental agreement by the resident.

There is a lot of confusion surrounding the term “damages”. As FS 83.43(12) clearly states the term isn’t limited to just monetary damage, such as the lost rent. Damages are the compensation recoverable for any loss suffered by the manager due to the resident’s breach of the lease. In the following paragraphs I have listed some of the common items for which deductions are made. The listings are examples only and are not intended to be exhaustive.

Most Common Damages

The most common damages chargeable against the security deposit are rent (the unpaid rent for the month of vacating: the entire month can be claimed, not just the prorated rent through the vacating date), late charges, NSF fees, accrued utilities, including water, sewer, gas, electric and garbage (utilities are often billed in arrears), pest control, valet trash service, eviction court costs and attorney’s fees. Court Registry funds which are already the subject of a court order in the manager’s favor should not be listed.

Concession recapture is not permitted without clear authorization under the lease. Even then, there may not be a clear answer as to whether a concession can be recaptured. Our firm believes that the recapture should be allowed, since the statute places no prohibition on this. However, a judge could take the position that the statute does not directly provide the manager with this remedy, and therefore the recapture of the concession is prohibited.

Our firm advises against accelerating rent or any other charges in order to deduct them against the security deposit. If after deducting all the current damages, a security deposit balance remains and the lease term has not expired, the manager should contact his attorney to discuss his options.

Physical Damages

Physical damages to the rental in excess of ordinary wear and tear are valid claims against the security deposit. The manager should remember that after a year or more of use, there will be some ordinary wear which should not be charged to the resident. The manager should also remember that many judges will build in a depreciation factor to many items supposedly needing repair or replacement. Thus, a manager should not attempt to charge a resident for the full cost of carpet replacement, when the useful life of the carpet was already 90% exhausted prior to that resident taking occupancy. The term “ordinary wear and tear” does not appear in the Landlord/Tenant Act, but most judges will enforce a variation of this concept. Particularly with regard to physical damage claims, managers would be well advised to settle with residents, if possible, rather than risk an adverse court decision. The amount in dispute is usually small compared to the liability for the prevailing party’s attorney fees.

When the unit has not been left clean, cleaning charges can be deducted. Like ordinary wear and tear, “clean” has no statutory definition, and resident disputes are better settled then litigated. If the manager imposes a standard nonrefundable redecorating or cleaning fee, then the manager may have waived the right to charge for any further painting or cleaning, as the case may be.

If the resident has made unauthorized alterations to the rental, then the removal of the alterations and restoration charges are valid deductions from the security deposit. If the resident has made authorized alterations, which the manager is leaving in place, then there should be no deduction from the security deposit. If the manager is removing the authorized alterations, then the lease should indicate that it is the resident’s duty to restore the premises to the original condition. If the lease is silent or unclear on this duty, then the authorization may be seen as a waiver of any resident obligation to restore.

Most capital improvements are the manager’s responsibility, such as roof, plumping pipes, outside or patio painting. Unless the damage is the result of the resident’s intentional act or negligence, it is inappropriate to charge the resident for these repairs or repainting. Claims based upon the resident’s intentional act or negligence are often difficult to prove.

Problem Areas

Managers, who are placing the rental for sale or re-occupying the rental, are tempted to overreach when charging the resident for cleaning and repairs, and judges are very aware of this dynamic. Another issue arises when a deduction is made without an actual repair subsequently being conducted. There is no legal requirement that a particular damage be repaired in order to entitle the manager to a deduction from the security deposit. However, claiming damages without making the repair will require clear and convincing proof. Managers should have particularly well documented files for any charges in the above scenarios.

Courts have held that certain damages are chargeable against the security deposit only if the lease provides for them in explicit, unambiguous language. Leases can maximize the claims against the security deposit by identifying these items as damages. If the lease isn’t specific, a general catch-all clause may suffice. However, reliance on general language is risky. Examples of these damages are often found when a single family home, townhome or condo lease is breached by a resident vacating early: continuing lawn care and pool service, continuing electric or gas for the fan, air conditioning or heat (to prevent mold or freezing damage to pipes), commissions, re-leasing fees, advertising charges, and administrative or delivery charges for the delivery of Three-Day or Seven-Day Notices. Even if the lease language clearly provides deductions for certain types of damages, a judge can decide not to enforce these charges against the resident, but rather make the manager bear the cost, such as administrative fees of the manager’s agent.

Charge lists for repairs or replacements, when reasonable, will likely be upheld. It is overreaching that leads to judicial skepticism. If a manager doesn't buy at retail, the charge sheets shouldn't be at retail.

Some damages are not chargeable against the security deposit regardless of a lease provision permitting the charge. Any administrative charge for preparing the notice of claim against the security deposit or the certified mail postage on the notice of claim are the manager’s statutory duties and are not chargeable to the resident.

Notice of Claim

The manager must account on the Notice of Intention to Impose Claim on Security Deposit not only for the security deposit, but also for any pet deposit or other deposits, such as appliance, utility, garage or common area deposits. Although not technically required under Florida Statutes, it is good practice to account for the last month’s rent on the notice of claim.