Summer break has come to an end, and children have started school again. In South Florida this means that “season” is right around the corner. Season is the time of year when many snowbirds come down to avoid the cold winter, as well as many international folks who are involved in the equestrian community. It is the perfect time when investors, and others who vacate their homes for a few months, provide housing for those coming down for season as they can usually obtain a good rental premium.
While seasonal renting can be lucrative for landlords, it is important that they are protected while doing so. A well-written lease agreement that protects a landlord is a must. A useful tip for landlords with seasonal rentals, as well as yearly rentals, is to try to obtain the entire rental amount up front or as much as possible. Besides the obvious benefit of collecting the money at the beginning and not wondering if the tenant will make the next payment or not, there is another benefit as well. Should the lease need to be terminated, say because the tenants throw an unruly party, if the lease is properly terminated by the landlord, the landlord could be entitled to keep the remaining amount of money that was paid for advanced rent.
In fact, this is exactly what happened in the Fourth District Court of Appeals case Atlantis Estate Acquisitions Inc., v. DePierro. In this case, the landlord and tenant negotiated a yearlong lease term with a decreased rental amount if the entire year was paid in one lump sum at the beginning of the lease. So, the tenants agreed and paid $66,000 in a lump sum. Only a few months into the lease term the tenants threw what must have been quite the party as they received many complaints from neighbors, the police were called, and there was “significant damage to the interior” of the home. It was like a scene from the movie Project X that came out a few years about teenagers throwing an epic party and totally trashing the house. The tenants vacated the property as demanded by the landlord. The tenants then asked for their remaining rental funds back but the landlord refused, so the tenants sued.
At the trial court level the tenants prevailed. The trial court ordered that the landlord pay the tenants the remaining rental funds ($38,500), and that the tenants could recover half of their security deposit stating that the tenants made repairs to the property. The landlord appealed, and the appellate court ruled in favor of the landlord. The appellate court found that the lump sum payment was not considered advanced rent under the Florida Statutes; rent paid in advance for a current rent payment period. This was because the rental payment was yearly and there was a single payment paid. The appellate court went even further though and stated that even if the funds were considered advanced rent that the landlord would still be entitled to the funds. The court stated that “in Florida, if a lessee pays rent in advance and the lease is properly terminated by the lessor, then the lessor is not required to return the advance rental payment.” Thus, the landlord was entitled to keep the $38,500!
In conclusion, when renting property to tenants, especially for seasonal rentals, try to obtain the entire rental amount, or as much as possible, up front as Florida law provides protections to the landlord. If the lease is properly terminated because of the tenant’s misconduct, the landlord could be entitled to retain the rent that is paid in advance. This would help mitigate any potential damage above and beyond the security deposit, as well as help alleviate the loss of rental income if the property remains vacant after the lease was terminated.
Born and raised in South Florida, Dane E. Leitner concentrates his practice in the areas of civil litigation, family and marital law, and condominium and homeowner association law. If you have questions regarding your real estate and property matters including seasonal rentals, please contact Dane at firstname.lastname@example.org or call (561)842-3000.