The ultimate guide to security deposits in rentals

Embarking on the rental adventure and encountering an unfamiliar term?!

If “security deposit” seems as vague to you as a complex math equation, don’t panic! With this guide, the security deposit will have no more secrets for you. This amount is paid by the tenant to their landlord upon signing the lease. But far from being a mere formality,

it’s a safeguard against unpaid rent or possible damages to the property. We’ll detail everything, from the typical amount requested to the return process, which must occur within a specific time frame after the keys are handed over. In this article, we will also discuss the crucial difference between a security deposit and a guarantor. Often confused, the latter is a sum that remains as backup support.

The guarantor is not systematically paid. And because the life of a tenant is full of little and big adventures, you’ll find a range of tips to ensure the return of your security deposit is as smooth as the signing of your contract. Ready to become a rental pro? Follow the guide!

What is a security deposit?

Let’s dive right into the heart of the matter. The security deposit is that significant amount you pay to the landlord upon moving into your accommodation and signing your lease.

Far from being a mere formality, it’s a key element that secures the transaction for the owner. Think of it as a kind of financial handshake that says, “I will take good care of your property.”

In practical terms, this amount is most often equal to 1 month’s rent for an unfurnished property, and sometimes double for a furnished one. This sum is there to cover potential damages, beyond normal wear and tear, and possible future repairs or to compensate for unpaid rents. In other words, if things go south, the landlord has a little reserve to avoid any nasty surprises.

Rest assured, the landlord can’t just do whatever they want with your security deposit. The law strictly regulates its use. It’s not up for the landlord to use at their discretion or to divert a portion for other unintended purposes. At the end of the lease, and after a compliant exit inventory of fixtures, the deposit is returned to you, except in the case of justified damages.

Be careful! It should not be confused with a “guarantor” as they are quite different. A guarantor is a commitment made by a third party to cover any rent arrears if necessary. The landlord might opt for a guarantee solution like the Visale guarantee.

This guarantee, provided by the national public institute Action Logement, covers you in front of your landlord in case of unpaid rents. The security deposit, on the other hand, is money already paid, ready to be used if needed. If you’re struggling to gather this potentially significant amount, aids like the FSL (Housing Solidarity Fund) are there to support you and help you move through this stage more peacefully.

Security deposit payment terms

The security deposit cannot be paid at the whim of either the recipient or the tenant. While there’s no fixed date for payment, as mentioned earlier, it must be paid upon signing the lease. It’s a mutual exchange of good faith between the tenant and the landlord.

The security deposit can be paid either by bank transfer or by check. Make sure to keep a written record of this payment to avoid any misunderstandings. The amount of the security deposit is also regulated and capped.

For instance, Article 22 of the Law of July 6, 1989, states that for an unfurnished rental, it cannot exceed one month’s rent excluding charges. However, for a furnished rental, the amount can be up to two months‘ rent excluding charges at most.

Here we explain the differences between a furnished and unfurnished apartment.

Recognizing the difficulty of gathering this amount, especially for younger tenants, some landlords or companies like Colivys only require one month’s rent. It’s our way of making accommodation more accessible to everyone. The deposit is kept by the landlord, who may choose to cash it immediately or not.

Its use is strictly regulated. Although the property is an investment for the landlord, they cannot use the deposit unjustifiably.

The security deposit can only be used for specific costs such as:

  • Restoration and repairs due to damages caused by the tenant,
  • Compensating for delays, late payments, or unpaid rents by the tenant.

If there are no damages or unpaid rents attributable to the tenant, then the security deposit must be fully refunded. Also, if the rental is located in a condominium, the terms slightly differ. The security deposit can be returned in two parts, at different rates:

  • 80% of the sum to be returned at the end of the defined period (either 1 or 2 months),
  • 20% of the remaining sum 1 month after the annual closing of the building’s accounts.

Note that under no circumstances can the amount of the security deposit vary during the lease, regardless of its duration or if a new lease is established. No fees can be deducted. The amount initially paid and cashed is the due and demanded sum that must be returned to you.

Return of the security deposit

The time to leave has come, and so has the return of your security deposit. Sounds like good news, right? In theory, yes, but in practice, your security deposit isn’t simply handed back to you. There are some conditions to be met.

First, an inspection of your accommodation must be conducted. This compares the initial state of the accommodation with the state you leave it in. This crucial step determines whether your deposit can be returned to you. It can also be returned in advance. If the exit inventory of fixtures matches the incoming inventory of fixtures, the landlord has 1 month (30 days) to return your security deposit. However, if it’s not in accordance and there are discrepancies, then this period extends to 2 months.

To justify the non-compliance, the landlord must provide invoices or estimates for any repairs or purchases of materials. They are also obligated to provide a detailed and justified explanation for retaining any part of the security deposit, to avoid any conflicts at the end of your lease. As a tenant, be aware that if part of the deposit is retained, the payment of the remainder must still be made within a legal timeframe of 2 months (60 days), as stipulated in the contract signed by both parts.

Challenges with the security deposit

The process of dealing with a security deposit isn’t always straightforward, and you might encounter some obstacles on the way to getting your deposit back into your bank account. Here are the major challenges you might face:

  • Delayed return of your security deposit

Delays can happen. However, according to law n°89-462 of July 6, 1989, in the event of a delay, the amount of the security deposit owed to the tenant is increased. This increase is equivalent to 10% of the monthly rent, excluding charges, for each started month of delay. This means that if your landlord returns your security deposit after 45 days, they must add 2 times 10% of the monthly rent. You can send a formal demand to the landlord to return your security deposit, along with penalties, by sending a registered letter, a slight cost that you will bear, with acknowledgment of receipt. Always leave a paper trail.

  • Disagreement over the amount withheld

The landlord might decide to retain a portion of your security deposit if they believe that refurbishment works are necessary. However, you may not see eye to eye on this. That’s why it’s essential to keep photos and documents related to the entry and exit inventory of fixtures, as well as the lease agreement, and proof of payment. This way, no party can serve their own interests.

To avoid any disagreement, clear communication is important. Starting a dialogue between the tenant and the landlord is the first recommended step. But when that’s not enough, external help such as:

  • Mediation

If direct communication doesn’t lead to a resolution, involving a third party for mediation can be an effective solution. This can help reach a mutual agreement between you and your landlord without resorting to legal action. Mediators can be found through mediation organizations or professional lists. While quicker than a lawsuit, several sessions may be required to reach an agreement, but it’s often worth it.

  • Legal Recourse

If mediation fails, there’s the option of taking legal action. As a tenant, you can approach the Departmental Conciliation Commission or the local court to dispute the deduction or delay in the payment of the security deposit. Law n°89-462 of July 6, 1989, covers this and provides protection for both parts, landlords and tenants alike. A bailiff or a judge may be appointed.

Ours tips for effectively managing the security deposit

For landlords

To stay compliant and within the law, ensure the amount requested as a security deposit doesn’t exceed the legal limit (1 month’s rent excluding charges for an unfurnished rental, and 2 for a furnished, only 1, remember?).

Then, adhere to the capped period for returning the deposit, which ranges from 1 to 2 months after receiving the exit inventory of fixtures report, conducted at no charge, with the owner or the real estate agency. This will save you from additional fees and a possible formal notice from the tenant.

During the entry and exit inventory of fixtures, be thorough. Photos and written records are crucial. Conducted with precision and attention to detail at each stage of the lease, these proofs attest to the condition of the property and cannot be disputed. If a deduction is necessary, it must be justified and transparent about its use.

Estimates, invoices, projections: try to show everything to the tenant so they know their security deposit is indeed going towards refurbishment works.

For tenants

As a tenant, you also need to be meticulous with the inventories of fixtures. Take videos and photos, keep a copy of your lease, correspondence (letters sent, mails, etc.), and most importantly, verify the information written in them. Once in the property, strive to maintain the condition of the walls, plumbing, etc., to avoid deductions from your security deposit for post-contract repairs.

If you notice damages like mold, holes, or a leaking hot water heater, inform your landlord/owner by email or registered letter, with photos as proof, so they are aware of these issues.

Keep written evidence; you never know. If you want to involve a company, discuss it. The owner might have their list of companies or a recommendation for you. As a tenant, keep a close eye on the security deposit amount, ensuring it doesn’t exceed the set number of months’ rent.

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