Trust Accounts & Surety Bonds for Security Deposits

Florida law requires every security deposit to be held in one of three specific ways. Choose the wrong method — or fail to set it up correctly — and you lose the right to claim any portion of the deposit when the tenant leaves.

Section 83.49(1) gives Florida landlords three options for holding a tenant’s security deposit. Each option has different requirements for account type, interest obligations, and tenant notification. The landlord must choose one — and the choice affects both the landlord’s administrative obligations during the tenancy and the initial notice that must be given to the tenant within thirty days of receiving the deposit.

1. Side-by-Side Comparison

2. Option 1: Non-Interest-Bearing Account

This is the simplest and most commonly used option. The landlord opens a separate bank account at a Florida banking institution, deposits the security deposit into that account, and holds it there for the duration of the tenancy. The account must be designated for security deposits only — the landlord’s personal or business operating funds cannot be deposited into or held in the same account.

No interest is owed to the tenant. The landlord’s only obligations are to maintain the account, to give the initial notice identifying the bank and stating that the deposit is held in a non-interest-bearing account, and to follow the statutory return and claim procedures when the tenancy ends.

For landlords with multiple units, a single non-interest-bearing escrow account can hold the security deposits for all tenants — provided the landlord maintains records showing the amount attributable to each tenant. The account does not need to be a separate account for each tenant.

3. Option 2: Interest-Bearing Account

The landlord holds the deposit in a separate interest-bearing account at a Florida banking institution. The tenant is entitled to interest calculated in one of two ways, at the landlord’s election: 75% of the annualized average interest rate payable on the account, or 5% simple interest per year on the deposit amount.

Interest must be paid to the tenant at least once per year (annually) and upon termination of the tenancy. The interest is typically credited to the tenant’s account or paid by check at the end of each year and upon move-out. If the landlord imposes a claim on the deposit at the end of the tenancy, the interest owed to the tenant is calculated on the deposit amount up to the date of vacancy, and the interest must be either paid to the tenant or included in the accounting of the deposit disposition.

In practice, this option is less common because the administrative burden of tracking and paying interest outweighs the minimal benefit to the tenant (given today’s low interest rate environment, 75% of a typical savings account rate yields pennies). However, some property management companies use interest-bearing accounts as a standard practice.

4. Option 3: Surety Bond

Instead of depositing the funds in a bank account, the landlord posts a surety bond in the amount of the security deposit with the clerk of the circuit court in the county where the rental property is located. The bond is issued by a licensed surety company and is conditioned upon the landlord’s faithful compliance with Section 83.49 — meaning the surety guarantees that the deposit will be returned to the tenant in accordance with the statute.

The key advantage of the surety bond is that the landlord keeps the deposit funds. The money is not sitting in a bank account earning minimal interest — the landlord can use it in their business, invest it, or deploy it however they see fit. The bond ensures the tenant is protected regardless of what the landlord does with the actual funds.

The trade-offs: the landlord must pay the surety premium (typically 1%–3% of the bond amount annually), must pay the tenant 5% simple interest per year on the deposit amount (regardless of what the landlord actually earns on the funds), and must maintain the bond for the duration of the tenancy. The landlord must also notify the tenant that the deposit is secured by a surety bond (including the surety’s name and address and the bond number) in the initial notice.

When the Surety Bond Makes Sense

The surety bond option is most attractive to landlords with large portfolios who want to keep substantial deposit funds working in their business. For example, a landlord holding $500,000 in aggregate security deposits across a portfolio of rental units may prefer to invest those funds and earn a return significantly greater than the 5% interest owed to tenants — even after paying the surety premium. For a landlord with a single unit and a $1,500 deposit, the surety bond is rarely worth the administrative complexity.

5. Switching Between Methods

A landlord may change the method of holding the deposit during the tenancy — for example, moving the deposit from a non-interest-bearing account to an interest-bearing account, or switching from a bank account to a surety bond. However, the landlord must notify the tenant of the change within thirty days of the change, including the new depository information, the type of account or bond, and any interest obligations.

When the rental property is sold, the selling landlord must either transfer the deposits to the new owner (and notify the tenants of the transfer and the new owner’s information) or return the deposits to the tenants. The selling landlord remains liable for the deposits until the transfer is complete and the tenants are properly notified.

6. Common Compliance Mistakes

Commingling. Depositing security deposit funds into the landlord’s personal checking account or business operating account. This is the most common violation and the easiest to prevent — open a separate account.

Failing to give the initial notice. The landlord must notify the tenant within thirty days of receiving the deposit, identifying the depository and the type of account. Failure to give this notice forfeits the right to impose a claim on the deposit — even if the deposit is properly held in a compliant account.

Failing to pay interest when required. If the deposit is held in an interest-bearing account or secured by a surety bond, interest must be paid at least annually. Failure to pay interest is a breach of the landlord’s statutory obligations.

Using an out-of-state bank. The statute requires the deposit to be held in a Florida banking institution. A deposit held in an out-of-state bank does not comply with Section 83.49(1).

Need Help Setting Up Compliant Deposit Accounts?

We advise landlords on the best holding method for their portfolio and ensure every notice, account, and procedure complies with Section 83.49.

7. Frequently Asked Questions

Related Guides

• ← Back to: Florida Security Deposit Laws (Pillar Guide)
• Notice to Impose Claim on Security Deposit
• Return Timeline and Penalties
• Allowable Deductions Guide
• Defending Claims in Court