Renting a house can often be a complicated process with a lot of nuances involved. The tenant needs to keep in mind multiple factors to ensure that the house they are renting suits their needs and provides all the required amenities without burning a hole in their wallets. An extra financial burden tenants face while renting a house is the payment of security deposit.
While a security deposit is an important requirement and serves several purposes, landlords often use the loopholes in the system to exploit the tenants by demanding exorbitant amounts. It therefore becomes important to have proper information about the security deposit clause in the rent agreement and be aware of one’s rights as tenants.
Security deposit: Definition and overview
Security deposit in a rent agreement is defined as an extra charge alongside the rent collected by a landlord from the tenant before they move in. This amount is used by the landlord to repair or control any unforeseen loss caused to the landlord damage caused to the property by the tenants’ action while the property is in their use.
The security deposit must be mentioned clearly in the terms of the rental agreement and is fully refundable once the lease period has ended, subject to conditions. While there are mechanisms to govern the imposition of exorbitant amounts of security deposits, they are not very effective. Most places do not allow landlords to charge a security deposit worth more than two months of rent in case of residential buildings. This can go up to six months in case of commercial spaces.
Security deposit vs advance rent
While entering into a lease contract, the payment of a security deposit might seem like an advance rent. However, this is not the case. The security deposit is a charge imposed over the rent to account for unforeseen loss to the landlord by the action of tenants. It is fully or partially refundable subject to the kind of loss posed to the landlord.
However, an advance rent, as the name suggests, is the rent amount of more than a month paid to the landlord together. The landlord is not liable to return this amount once the lease period is over since it is the amount paid for the usage of his property.
See also: All you need to know about rent agreements in India
Significance of security deposit collection
Security deposit is supposed to be a precautionary measure for landlords to avoid any unforeseen losses while the property is in use by the tenant. It is also an important measure to ensure accountability on the part of the tenants and prevent them from escaping their financial responsibility as one of the parties signing the lease agreement.
If the landlord finds any damage to the property caused by the tenants or they default in paying the rent for a few months, landlords may refuse the refund. Other than this, the landlord is liable to pay back the security deposit in full to the tenant if no unforeseen damage is found and there are no dues in the monthly payment of the rent.
See also: What options do tenants have against eviction notice from landlords in India?
Getting your security deposit refunded
In an ideal situation, the landlord is liable to refund the entire security deposit at the end of the rent tenure. If not, the tenant has the right to know the reason behind withholding the deposit and challenge it if required. The deposit can be withheld only in cases of damage caused by the tenant or defaulting in payment of rent.
For example – structural damage, wear and tear and other regular maintenance the property might require after being used by the tenant, such as whitewashing, cannot be covered by the security deposit and it is the responsibility of the landlord to pay for these from their own pocket. However, damage caused to walls or fixtures by the tenant can be paid for using the security deposit and the landlord holds the right to not refund the amount required for such repairs.
All important information related to security deposits is clearly mentioned as a separate clause on the lease agreement. It is absolutely necessary for the tenant to carefully read the terms before signing to avoid any misunderstandings in the future. It is also important to have proper knowledge about the working of security deposits so that refund-related issues can be resolved.
FAQs
What is a security deposit?
Security deposit is an amount charged by the landlord over the rent from the tenant before they move in to account for unforeseen losses caused by the tenants’ usage of the property.
Is a security deposit the same as advance rent?
No, the security deposit is not the same as advance rent as it is refundable after the lease period is over.
Where is the security deposit mentioned?
The security deposit to be paid at the time of moving is clearly mentioned as a separate clause in the lease agreement and cannot be violated.
Can the security deposit be refunded?
Yes, the security deposit is fully or partially refundable subject to conditions.
When can the landlord refuse the refund of the security deposit?
The landlord may withhold the security deposit in case of damages to the property caused by the tenants or defaulting in the payment of rent.
How do I know if the landlord is charging the correct amount of security deposit?
Generally, landlords are not allowed to charge a security deposit amounting to more than two months worth of rent in most places.
What to do if the landlord refuses to refund the deposit?
If the landlord refuses to refund the deposit without any concrete reason, they can be subjected to legal action owing to the terms of the rent agreement clause.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |
