Question: One of our owners insists on holding the security deposit if we manage his property. I am somewhat nervous about this. If the owner is not in the best financial shape and may spend the money. Could we have any liability for allowing the owner to hold the deposit?
Answer: Unless it is a finder’s-fee-only type situation, it is never a good idea to allow the owner to hold any deposits. If the owner fails to return the deposit, spends it, or there is a dispute over the deposit when the tenant vacates, rest assured that the tenant will come after you as well, as they most likely paid the deposit to you.
If the owner insists and you are willing to take the risk, there are a few things you can do to protect yourself. I would definitely provide the tenant with a Security Deposit Disclosure that clearly states that the owner is holding the deposit and that you as the manager have no control over it whatsoever. When you send the money to the owner, make sure it is to the owner’s Florida escrow account. I would deposit the money into the account myself if a branch of the bank is nearby.
Finally, provide the owner with a copy of Florida Statutes 83.49 and also a copy of a Notice of Intention to Impose a Claim on the Security Deposit and have the owner sign an acknowledgement that they received this from you.
Many property owners fail to properly handle the deposit and in the event a problem occurs, you do not want to be involved. I would also recommend to visit FirmPM.com where you can find great property management information on their Landlord Academy.