SECURITY DEPOSIT PRIMER PART 2 INITIAL DISCLOSURES
All security deposits and advanced rents are governed by Florida Statute Section 83.49. The statute obligates the manager to inform the resident of particular information whenever a security deposit or advance rent is held.
When Disclosures Must Be Made.
No later than 30 days after a manager receives advance rent or a security deposit, the manager must make the disclosures to the resident. The notification must be in writing and given in person or mailed to the resident.
Many times, the disclosure is in the lease itself. This is the best way to present the information, because later, there can be no dispute that the disclosure was made.
What Must Be Disclosed?
The manager must disclose where and how the security deposit and advance rent is being held. The disclosure must tell the resident the rate of interest, if any, the resident is to receive and when the interest payments are to be paid to the resident.
The Written Disclosure Must Show:
- The name and address of the depository where the advance rent or security deposit is being held;
It is best to use the whole street address of the bank, not just the name of the City. However, the complete name of the bank and the name of the City is likely to be considered adequate.
- Whether the advance rent or security deposit is being held in a separate account for the benefit of the resident or is commingled with other funds of the manager;
This does NOT mean that it is ok to commingle the funds.
- Whether the funds are deposited in an interest-bearing or non-interest bearing account.
- If the account is interest-bearing, the disclosure must state when the interest payments will be made to the resident.
- Include a copy of the provisions of Florida Statute 83.49 (3).
After the manager makes the initial disclosures, circumstances can change – a bank closes, a new owner takes over, etc. If the manager changes the manner or location in which the funds are being held, the manager must notify the resident, in writing, within 30 days of the change.
Consequences of Non-Disclosure.
Unlike other portions of the security deposit statute, there is no clearly defined “penalty” to be applied to a manager who fails to make the disclosures. Thus, a resident who sues a manager for failing to make the required disclosures must prove that the non-disclosure resulted in losses suffered by the resident.
For licensed real estate professionals, the failure to make the disclosures can be a violation of FREC rules.
Even if there is no lawsuit or FREC complaint, the failure to disclose marks a very sloppy lease-up procedure. It tends to cast the manager in a very poor light, which can be problematic if the manager has to defend himself before a judge.
- The Curable Noncompliance Examined PART 1
- THE CURABLE NONCOMPLIANCE EXAMINED PART 2
- THE WRIT OF POSSESSION – WHAT IT IS
- THE WRIT OF POSSESSION AND THE FULL UNIT
- WORK ORDER COMPANY POLICY AND THE LAW