There will invariably come a time when a property manager’s services are terminated by the owner, and the owner will either want to manage the property himself or will want to hire another property manager. Additionally, a property could sell, and a new property owner will wish to terminate the services of the property manager. In every case, either the new property manager or the owner will demand that you transfer the security deposit out of your escrow account and into their account. Florida law specifically deals with how this is accomplished and must be followed. Failure to follow the law could result in a lawsuit or a FREC complaint. The term licensed property manager in this article refers to those persons holding a real estate sales or broker's license.

1. The licensed property manager is fired, and another licensed property is taking over management.

In this situation, no permission is needed from the tenant to transfer the funds from your escrow account to the escrow account of another licensed property manager. The new property manager must notify the tenant where and how the money is being held. Property managers who are fired are often angry, as they feel that the firing was wrongful and money is owed to them by the owner. Money may indeed be owed and the filing may have been unfair or wrong, but NEVER hold back the transfer of money to the new property management company as an attempt to try to recover owed commissions. This type of an attempt at self-help recovery of commission money by touching the tenant’s money is illegal and wrong.

2. The licensed property manager is fired, and the property owner decides to self-manage

If the owner is self-managing, it is unclear whether the property manager must get permission from the tenant to transfer the funds. The law simply does not address this.  While permission is always advisable, sometimes it is better to ask for forgiveness rather than permission.  The two forms are the Security Deposit Transfer Agreement and the Security Deposit Transfer Notice.

3. The property sells to a new owner, and the property manager is fired.

Oddly enough, the tenant does not have to give permission for the property manager to transfer the funds to a new owner if the property is sold. This makes the reasoning in situation #2 seem faulty, but it is the case. Since a typical owner of rental property will not know how to follow the law, we recommend that you give the new owner a copy of Florida Statutes Section 83.49 and keep a record in your file that you gave the new owner the information.

Transferring the money out of state

Often owners will be out of state and will want you to send the money to them through the mail. Security deposits must be kept in a Florida banking institution. We urge you never to send the escrow funds out of Florida, even if the tenant gives you written permission. If they get pushy, send them a copy of the law and document every conversation and correspondence. Fortunately many banks operate in multiple states, so it has become easier for owners to have a Florida bank account which has branches in their state.

Florida Law excerpt of Section 83.49

(7) Upon the sale or transfer of title of the rental property from one owner to another, or upon a change in the designated rental agent, any and all security deposits or advance rents being held for the benefit of the tenants shall be transferred to the new owner or agent, together with any earned interest and with an accurate accounting showing the amounts to be credited to each tenant account. Upon the transfer of such funds and records as stated herein, and upon transmittal of a written receipt therefore, the transferor shall be free from the obligation imposed in subsection (1) to hold such moneys on behalf of the tenant. However, nothing herein shall excuse the landlord or agent for a violation of the provisions of this section while in possession of such deposits.

                                                   LAW OFFICES OF HEIST, WEISSE & WOLK, PLLC

“Serving the Property Management Professional”

www.evict.com      www.evicttv.com      www.evictforms.com      info@evict.com