UNCLAIMED SECURITY DEPOSIT FUND PROCEDURE

Your resident has vacated, you sent a partial or full refund of the security deposit by certified mail, and it is returned to you unclaimed. What do you do with the funds? Hold them forever? Disburse them to your owner or company? Florida law specifically deals with the procedure a property manager must take with these funds in Florida Statute 717, the Florida Disposition of Unclaimed Property Act.

What Type of Funds Will You Be Holding

Most commonly, you will be holding the security deposit or a partial security deposit. Other deposits may include but are not limited to the pet deposit, key deposit or a deposit the condominium association may have required.

Are These Funds Unclaimed?

Typically, you have sent out the Notice of Intention to Impose Claim on Security Deposit, and this has come back to you “unclaimed”. The refund check is still in the envelope. In other less common situations, there is evidence of receipt of the certified mail, as you have received back the return receipt “green card”, but for some unknown reason, the check is never cashed, and each month it shows up in your escrow account as an outstanding sum paid but not cashed. This can be an annoyance as time goes on, as this will inevitably occur in property management multiple times.

Due Diligence

Since you may not have a forwarding address, you have sent the funds to the “last known address,” which is indeed the home or apartment which the residents were renting. Since many vacating residents do not put in a forwarding order with the post office, it becomes difficult to discover a new address absent notification from the resident. This is where some investigation needs to begin, and this investigation can save you significant time and aggravation later. In the first place, you need to send it again by regular mail, unless it was sent back to you with notification that the resident had moved and no forwarding address is on file.

The “Certified Mail Conundrum”

It is quite possible that the certified mail did indeed get forwarded to the new address, was refused, unclaimed and still never made it back to you, or was in fact claimed, but the “green card” did not show that the mail had been forwarded. There is a strange aversion by many people to claiming certified mail which results in a large percentage of the certified mail never making it to the recipient. Many individuals feel that by accepting the certified mail, something ”bad” will occur to them, hence the certified mail is refused. In many other cases, the certified mail is indeed accepted, but the “green card” somehow never makes it back to the sender. There seems to be no reasonable explanation for this common occurrence, other than often the postal worker fails to remove the “green card” from the back of the envelope, and the recipient then has both the green card and the certified mail in his or her possession. We recommend that you first send the Notice of Intention to Impose Claim on Security Deposit and refund check by certified mail, but if this is returned to you, you follow this up with regular mail of a copy of the Notice of Intention to Impose Claim on Security Deposit and a replacement check; the original certified mail envelope should be left intact (unopened), and the check within that envelope can be voided on your check records. You are not required to send a refund check by certified mail. You are only required to send the Notice of Intention to Impose Claim in this fashion.

Locating the Resident

In the old days, you could simply find out the forwarding address from the post office if there was one on file. This is not possible anymore. Now comes the time to begin to dig into the file to see if the application gives any clues where the resident works or worked, emergency numbers, or any other names or addresses you can find which you can call or write to possibly gain a proper address. There is no prohibition on calling any of the numbers you may have in the application or writing to any addresses you may have, since you are now simply trying to return some money, and you are not engaged in any collection activities. You may glean some information by talking to neighbors of the former resident as to the new address. Remember, you have already sent the Notice of Intention to Impose Claim on Security Deposit out. You DON’T need to send it out again. You simply need to send back the money.

Cutting a New Check

If you have previously sent out the refund check and it has not been returned to you, you certainly do not want to cut a new check to the former resident unless you have stopped payment on the first check, and a significant amount of time has elapsed. We recommend waiting at least three months before taking any action. If you send a new check to the now located prior resident, and the resident somehow received or has been holding the original refund check, you could be in for an unpleasant surprise if both checks now are cashed.

Pulling Another Credit Report or Skip Tracing

If the resident originally gave you permission to pull a credit report in the application process, it is permissible to do this again in order to potentially find a new address. After some period of time, a new credit report will most likely contain information on the current resident address. Many companies offer reasonable skip tracing services as well, and the small amount of money spent could save time and money later.

You Have Exhausted All Your Resources But Cannot Locate the Former Resident. Now What?

If the refund is for more than $10.00, you are required to hold the funds in your escrow account for 5 years. Yes, you read that correctly. Florida law requires this extremely long time period to safeguard the funds from the time the funds were due to the resident and provides a means to dispose of these funds upon the end of the 5 years.

What Florida Law Requires

The Florida Disposition of Unclaimed Property Act requires you to exercise due diligence in attempting to locate the former resident. This means the use of “reasonable and prudent means under particular circumstances to locate apparent owners”. The exact requirements are listed in the Act and include using the Social Security number if you have one, using nationwide databases, mailing to the last know address unless you know for sure it is inaccurate, or engaging a licensed skip tracing company. You are required to send in a report to the State of Florida on the forms that they provide prior to May 1 of each year, or you could be subject to a penalty imposed upon you. You must send a final letter to the former resident no more than 120 days and no less than 60 days prior to filing the report with the State informing the resident that you are still in possession of the unclaimed refund. When you finally file the report, you must include the refund money with the report, and upon payment and delivery to the State, you will have no further liability to anyone and can remove the amount from your escrow account records.

The Moral of the Story?

A diligent property manager tries on a regular basis to keep updated information on his or her resident, including updated emergency numbers, addresses of emergency contacts, new phone numbers, new work numbers and addresses. By doing so, it will be easier to locate the resident and get the money OUT of your account!! When was the last time you updated your resident information?