Residential vs. Non-Residential Leases: How Florida Law Differs With Respect to Security Deposits

Security deposits are a common feature of many Florida real estate lease agreements. The primary function of a security deposit is to ensure the tenant abides by the terms of their lease. The landlord may subsequently deduct certain amounts from the security deposit to cover various breaches of the lease, such as unpaid rent or damage to the leased property beyond normal “wear and tear.”

Appeals Court Overturns Judgment for Tenant in Lease Dispute

Real estate litigation often arises over security deposits, i.e., tenants bringing legal action to recover deductions or even entire security deposits kept by the landlord after the lease terminates. It is important to understand that Florida law differs when it comes to security deposits in residential leases (apartments and other housing) versus non-residential leases (commercial properties). Generally speaking, residential security deposits are subject to far stricter regulation by state and local authorities.

A recent decision from the Florida Fourth District Court of Appeal, Westgate & Wabasso Corp. v. Word of Faith Community Development Corporation, helps to demonstrate this divide. This case involved a commercial landlord-tenant dispute. At the start of the lease, the tenant agreed to pay the landlord $10,300, of which $5,000 represented a security deposit. The remaining $5,300 represented the final month’s rent.

When the tenant later vacated the property, the monthly rent under the lease had increased from $5,300 to $6,550.40. As the tenant failed to pay the entire amount, the landlord deducted the difference from the security deposit and returned the remainder to the tenant. The tenant, however, maintained that the lease did not allow the landlord to increase the final month’s rent and demanded the return of the rest of their security deposit.

The tenant took the issue to court. A trial judge determined that the landlord failed to comply with Florida laws requiring the landlord to provide the tenant with written notice of its intent to claim any deductions against the security deposit. The judge therefore ordered the tenant to return the entire deposit with interest.

The Fourth District reversed and entered judgment for the landlord. There were two key legal errors in the trial judge’s ruling. First, the judge relied on Florida laws governing residential leases in determining the landlord had to provide written notice to the tenant. No such notice requirement applies to commercial leases.

Second, the lease itself declared that the landlord was not required to pay interest on the tenant’s security deposit. Again, Florida law imposes no such requirement on non-residential leases. Indeed, even with residential leases, the landlord can elect to hold a security deposit in a non-interest bearing account. (A residential landlord can elect to hold security deposits in an interest-bearing account, in which case it must also make certain interest payments to the tenant.)

Contact a Davie Real Estate Contract Dispute Lawyer

Disagreements over the interpretation and application of real estate leases are quite common. If you need legal advice or representation from a qualified Davie real estate contract dispute attorney, contact Valero Law today at 305-607-7011 to schedule a free consultation. We serve clients in Davie, Broward County, Coconut Grove and Miami-Dade County.

Source:

flcourts-media.flcourts.gov/content/download/2485150/opinion/Opinion_2025-0506.pdf