A sum of money paid to the landlord by the tenants before the tenancy starts or on the date of commencement of tenancy is called a security deposit. This money will be given back to the tenants if no extra costs other than bills, taxes, damage of wear and tear occurs in the house. The security deposit amount is lawfully owned by the tenants until the landlord can claim rights by presenting valid information or data to prove it.
There is no certain limits on deciding the amount of deposit but the RTB recommends that the deposit must stay equal or below the one month rent. The amount should be agreeable to both parties and a signed and dated receipt should be provided to both the parties.
The security deposit should be paid if;
The tenant is happy and satisfied with the property that the landlord offer him. The terms and conditions should be clear on the rights and responsibilities of each party. Paying the deposit through other modes than cash is most preferred and a receipt should be collected by the tenant. The tenancy starts from the moment the deposit is given and keys are handed over. If the tenancy hasn’t started even after the payment of deposit due to some problems, it is outside the jurisdiction of RTB.
The security deposit will be held by;
The landlord or the agent, and they are responsible to return the amount back to the tenant after the period of tenancy. It should be made clear at the time of the commencement of tenancy on who holds the security deposit. The contact details of both landlord and agent should be provided. If the landlord has given the property as lease to the agent, the amount will be kept by the agent. The agent handover the money to the landlord when the tenancy commences.
The deposit should be returned;
When the tenancy ends and the agreement has been honoured. The deposit should be returned promptly but not mandatory on the day the tenant leave the accomodation. The landlord can take enough time for inspection on any repairs, pending payments and cleanings to bee carried out.
The security deposit could be withheld if;
- There are rent arrears and the end of tenancy. The landlord can utilise the amount to cover the arrears
- If there is damage more than normal wear and tear like broke windows, holes in walls, littering and unhygienic maintenance, items missing or broken etc.
- Pending bills or charges like electricity bill, gas charges etc. The tenant should have a copy of the bill to prove his part.