Everything You Need to Know About Security Deposits
1.5 min read.
When entering into a lease or rental agreement for a new apartment, office, or commercial property, tenants must be aware of the requirement to provide a security deposit. This deposit is a financial cushion that landlords use to cover expenses in case the tenant causes any damage to the property or fails to meet their obligations under the lease.
What is the cost of the security deposit?
The security deposit is typically equivalent to one month's rent, although landlords may set a higher amount based on low credit scores and poor financial history. The deposit must be paid upfront at the beginning of the lease and will be held by the landlord for the duration of the agreement.
Is the security deposit refundable?
Provided the tenant meets their lease obligations and keeps the property in good condition, the deposit will be refunded when the lease agreement expires. However, landlords may deduct from the deposit to cover damages or other costs beyond normal wear and tear, as outlined in the lease agreement. It is the responsibility of the landlord to follow specific procedures when deducting from the deposit and to provide the tenant with a list of any deductions.
It is important to note that the security deposit should not be considered a substitute for the last month's rent. It is intended to cover any unforeseen expenses that may arise during the lease term. If a landlord fails to return the security deposit within the required timeframe, tenants may have legal remedies available to recover their deposit.
When advising your clients, it is important that they are aware of the security deposit requirements of a lease or rental agreement. It is a necessary precaution for landlords to protect their investments, but tenants have the right to a fair and transparent process when it comes to the return of their deposit.
References
Chen, J. (2022, October 24). Security deposit: Definition, primary purpose, and example. Investopedia. Retrieved May 3, 2023, from https://www.investopedia.com/terms/s/security-deposit.asp
Understanding security deposits in commercial real estate leases. AQUILA Commercial. (2022, December 12). Retrieved May 3, 2023, from https://aquilacommercial.com/learning-center/understanding-security-deposits-commercial-real-estate-leases/
Live The Westhaven Way
Apply to Westhaven Toronto Rentals Today!