QUESTION: I thought I understood real estate but now that I am about to lease a commercial property, I'm confused. The landlord is asking for a deposit that he wants to keep during the entire length of the lease. When I've bought property, the deposit was used as part of the payment at closing. What's this about and what else should I look out for in the lease I sign?
ANSWER: You are right. Leasing real estate has very different considerations from purchasing real estate. The deposit is one of them.
Landlords require renters to pay a security deposit prior to taking possession of the premises and they retain this to cover the costs of any damages beyond ordinary wear and tear. It can also be used to pay unpaid rent. It will not be returned until you vacate the premises.
A landlord must hold the security deposit in either a non-interest bearing account, an interest-bearing account (with you, the tenant, receiving either 5 percent interest annually or 75 percent of the interest the deposit actually earns). The landlord could also post a surety bond in an amount equal to the security deposit. The landlord must notify you of the manner in which he or she is holding the money within 30 days of receiving it.
The landlord has 15 days to return the money (with interest, if applicable) at the end of the lease or must notify you of a claim against the security deposit for damages. If the landlord makes a claim, you have 15 days to object. If you do not object, the landlord may deduct the amount of the claim from the security deposit and must return the remainder to you within 30 days of the date of the notice of the claim. This is all part of Florida law.
You are wise to be concerned about the terms of the lease. Landlords sometimes produce a lease that is heavily weighted in their favor. Be sure that issues that are important to you are also included. For example, who is responsible for maintaining items connected to the property such as HVAC equipment? Can you sub-lease if necessary? What type and level of insurance will you both carry? Under what circumstances may the landlord enter your premises? (This is important toward the end of the lease if you do not renew and the landlord wants to show the property to prospective tenants.) Do you have a right to renew the lease at the end and how would the new rent be determined? What are you cancellation rights?
As someone new to the pitfalls of leasing commercial property, you may want to seek the advice of an attorney before signing a commercial lease. There really is a great deal of money involved!
Attorney Sylvia Heldreth is a certified specialist in real estate law. Her office is located at 1215 Miramar St., in Cape Coral.
This article is not intended as specific legal advice to anyone and is based upon facts that change from time to time. Individuals should seek legal counsel before acting upon any matter involving the law.