Risk Management for Property Management Realtors

From an attorney’s perspective, the two most effective ways to minimize risk for a Realtor who manages residential rental properties are simple but critical: understand and strictly follow the Florida Residential Landlord and Tenant Act, and use a well drafted, comprehensive lease. Property management exposes Realtors to unique legal risks, and failure to comply with statutory requirements can result in significant liability.

I. The Florida Residential Landlord and Tenant Act

The Florida Residential Landlord and Tenant Act, found in Chapter 83, Part II of the Florida Statutes, imposes numerous obligations on landlords that directly impact Realtors who manage residential dwellings, including single family homes, condominium units, apartments, duplexes, triplexes, and quadraplexes.

Security Deposits and Advance Rent

Leases must include specific disclosures regarding security deposits and advance rent. All deposits and advance rent must be held in a bank account separate from the landlord’s operating account and located at a Florida bank. These funds may be held in an interest bearing or non interest bearing account. If interest is earned, the lesser of five percent or seventy five percent of the interest must be paid monthly to the tenant.

The lease must contain the statutory security deposit disclosure required by Florida law. If the landlord chooses not to maintain a separate bank account for deposits, the landlord must post a surety bond with the Clerk of Court and pay five percent interest to the tenant.

When a landlord rents five or more units, tenants must receive written notice within thirty days of receipt of the deposit identifying the bank holding the funds, whether a surety bond is in place, and the applicable interest rate.

Upon termination of the lease, the landlord must either return the security deposit within fifteen days or send written notice by certified mail within thirty days of intent to impose a claim against the deposit. Tenants then have fifteen days to object in writing.

Landlords may also offer tenants the option to pay a fee in lieu of a security deposit in accordance with Florida law.

Landlord and Tenant Maintenance Obligations

Landlords are required to comply with all applicable building, housing, and health codes. This typically includes maintaining roofs, windows, doors, floors, foundations, plumbing, and other structural components. For single family homes and duplexes, some of these obligations may be limited by a written lease.

Except for single family homes and duplexes, landlords are also responsible for pest control, maintaining common areas, providing garbage removal, running water, hot water, and heat during winter months, unless otherwise stated in the lease.

Tenants are obligated to keep the dwelling clean and sanitary, properly use appliances and systems, avoid damage, and refrain from disturbing neighbors.

Landlord Access to the Dwelling

Once a dwelling is leased, the tenant has the right of possession. The landlord may only enter the dwelling with tenant consent, in emergencies, for repairs with proper notice, to inspect or show the property in a reasonable manner, or under specific circumstances outlined by statute.

Termination of the Rental Agreement by the Landlord

Landlords must provide proper written notice to terminate a rental agreement. Notice periods vary depending on whether the agreement is oral or written and the frequency of rent payments. For written leases, notice is not required prior to the lease expiration date.

If a tenant breaches the lease, the landlord may terminate the agreement using statutorily required notices, including three day notices for nonpayment of rent and seven day notices for curable or non curable noncompliance.

Termination of the Rental Agreement by the Tenant

Tenants may terminate a lease if the landlord materially breaches maintenance obligations and fails to make reasonable efforts to correct the issue. Service members have additional rights to terminate leases under federal and state law.

Regaining Possession of the Dwelling

A landlord may regain possession only through lawful means, such as eviction proceedings, voluntary surrender, abandonment, or other limited statutory circumstances. Self help actions such as changing locks or removing tenant property are prohibited and expose landlords to significant liability.

If a landlord wrongfully regains possession, the landlord may be liable for damages, attorney fees, court costs, and injunctive relief allowing the tenant to return.

Risk to the Landlord and Realtor

If a tenant prevails in a lawsuit under the Florida Residential Landlord and Tenant Act, the landlord is typically required to pay the tenant’s attorney fees and court costs. Courts strictly enforce statutory compliance, and even minor errors can result in adverse outcomes.

II. The Importance of a Good Lease

Without a written lease, tenants have few obligations and landlords have limited protections. A comprehensive lease provides critical protections beyond those found in the statute.

A well drafted lease may include a fixed term, conditions under which security deposits may be retained, restrictions on use of the dwelling, occupancy limits, prohibitions on subleasing or assignments, limitations on alterations, liability limitations, utility responsibility allocations, maintenance obligations, pet restrictions, indemnification provisions, insurance requirements, compliance with association rules, and responsibility for taxes or tax increases.

The lease should also include a written inventory of appliances, fixtures, furnishings, keys, and access devices provided to the tenant.

Importantly, the lease must be consistently followed by the landlord and the property management Realtor. Failure to adhere to lease terms can undermine protections and expose the landlord and Realtor to claims for breach.

Conclusion

Effective risk management in property management requires strict compliance with Florida law and the consistent use of a detailed, enforceable lease. Attention to statutory requirements, documentation, and clear communication are essential to minimizing exposure for both landlords and Realtors.

Source: Barnes Walker Educational Series