Drew Wilson
A proposal slated to be heard on the House floor Tuesday would create consumer protections for tenants who choose to pay a monthly fee instead of a security deposit has taken flak for its connection to companies that offer such a service in Florida and other states.
The bills under consideration this Session (SB 884/HB 537) would set consumer protection standards to ensure full disclosure of terms before a lease is signed and to provide tenants with a guarantee that they may cancel the payment plan and instead provide a security deposit mid-lease.
The proposal’s legislative sponsors say the bills are a partial solution to the state’s affordable housing crisis. They contend that by cutting out the need for a security deposit — often equivalent to a full month’s rent — Floridians would be better able to stomach rising rents, which have spiked as much as 30% from pre-pandemic rates.
Landlords share the sentiment.
“We have a serious affordable housing shortage and this seems like a good way to help,” Thomas Bolf, who previously owned 10 rental apartments, wrote in a letter to the editor published in the South Florida Sun-Sentinel. “A major hurdle for new tenants was coming up with first and last months’ rent and security,” and this program “helps solve a big problem at a relatively low cost.”
The bill is narrow, solely focused on deposit alternatives that help renters move into new housing or better housing. Deposit alternatives will not conjure up more inventory in an increasingly tight market, but the option of paying a small monthly fee instead of a large deposit “can mean the difference between living in a home or a car,” according to Bolf’s letter in the Sun-Sentinel.
Shoring up the affordable housing market and landlord-tenant issues are well beyond the scope of the legislation, but its opponents have directed their frustrations with those issues at the bill. Their testimony has largely focused on high rents, costly security deposits, a shortage of affordable housing, and the Legislature’s arguable misuse of affordable housing funds.
But they never acknowledge the benefits. As one renter told The New York Times, “We used the money we would have paid for a security deposit to furnish the apartment.”
There are many companies working with tenants and landlords to offer security deposit alternatives, in Florida and nationwide. More than a half-dozen other entities have hired counsel to lobby on the bill.
Assurant, LeaseLock, Rhino, Obligo and Jetty all offer security deposit alternatives that compete for landlords’ and tenants’ business.
Some work only with landlords; others work directly with tenants and also with landlords. Some companies screen tenants individually; others rely on landlord screening. Some companies charge a monthly fee; others charge a single up-front fee.
LeaseLock, for example, insures landlords against losses typically covered by a security deposit. In turn, landlords would have the option to charge tenants a non-refundable monthly fee, which averages $25 for a typical $1500-per-month rental.
The bills under consideration this Session would not, as some have intimated, give one company an edge or set up a protected market. According to Rep. Jim Mooney, the House sponsor, the legislation serves to protect consumers by requiring they be informed of the pros and cons as well as their rights before they sign a lease. And, he asserts, the true beneficiaries are renters.
“It is 100% optional for both sides. If you have money for a deposit, great. If you have other needs for that deposit money, like food for kids or tires or electric deposit, then you make the choice of ‘do I take the unit with this program or do I go somewhere else.’ Your choice. You are always responsible for the care of the unit and the rent,” Mooney told Florida Politics.
“At the end of the day, I think most of us have had a situation with rental entrance. Sort of that move-in day problem of ‘where is the money coming from.’ We have added guardrails to make sure that the tenant understands this is not a deposit and that they have all the same rights they would have as if they paid upfront.”
