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What is an owner to do with that vacation property when they stop vacationing there?  What sustains an investment in an apartment building or multi-family housing?  What seems to be the most common real estate activity where people still struggle?  The answer to all 3 questions is one word: Rental.The rental of real estate seems like a very straightforward way to generate income from ownership of a property.  Anyone can do it.  Right?  Getting someone to move into your residential property and collecting money from them on a periodic basis is a great way to keep your investment productive, and truly anyone can do it.  However, there are many snags you can face along the way if you don’t have the advice of a real estate attorney on your side.  For this series I’m going to address 5 of the most common pitfalls that my clients encounter in the rental of their residential property.Number 1: Mishandled or Co-Mingled Security Deposits

Florida law requires that landlords exercise 1 of 3 options with regard to safe keeping of advanced rent and security deposits: hold them in a separate non-interest bearing account, hold them in a separate interest-bearing account, or post a surety bond (FS §83.49).  Who wants to go through the trouble of posting a surety bond (or finding out what a surety bond actually is for that matter)?  The simplest option is one of the first 2.

However, many landlords don’t go through the trouble of forming a separate account to hold these monies that belong to the tenant.  The law also requires the landlord to notify the tenant in the lease where the money is being held, or in writing within 30 days of receipt.  Many don’t.  They should!  Taking these simple steps will prevent a lot of headaches and scorn from the courts upon termination of the lease, should there be a dispute over these funds.  Just remember, don’t mix in any of your own money with the tenant’s money.  This is called co-mingling, and Florida law prohibits it.  Also be sure to retain a copy of the notice given to tenants as to the whereabouts of their deposits for your records.