Although ensuring the tenant will pay the security deposit when signing the lease rental contract is important thing, it is worthwhile to know that the amount of the security deposit landlord can charge has been limited and can no more than two months worth of rent if the rented property is the tenant’s main residence (main home). The period on which the landlord shall return the security deposit after the departure of the tenant are strictly framed (by law).

Why a security deposit?

The security deposit, which often called ‘guarantee’ is a sum of money the tenant will have to pay when entering the accomodation that shall be returned by the landlord at the end of the lease, if the property is not damaged (ensuring the cost of repair in relation to any damaged that could have occurred) and if all the rents have been paid.
Although it is not mandatory to take a deposit from the tenant, it is better to consider taking one to protect yourself in case the tenant can’t pay his rent or have not repaired damages caused to your property when leaving (damage to furniture etc.).

What is the amount of the security deposit for furnished rentals?

If the property is the tenant’s main residence, the amount of the deposit payable cannot exceed two months worth of rent excluding charges for furnished rentals and one month worth of rent for unfurnished rentals. There’s such a big difference between the amount of the deposits for furnished and unfurnished rentals since the deposit is also used to cover any damage caused to the property by the tenant (damage to furniture and equipment provided).
The security deposit is non-interest bearing. The landlord shall return it at the end of the rental lease. Unlike the rent, the deposit cannot be indexed or revised while the contract is still running (that can be renewed).
Beware: The deposit cannot be required when the rent is payable in advance for a period exceeding two months. However, if the rent is paid monthly by the tenant, the landlord may require the payment of a security deposit.

When must the landlord return the security deposit?

The landlord must return the deposit to the tenant within a maximum period of two months after the keys have been returned by the tenant and after withholding the total amount of the reparation where applicable if damages have been caused to the property excluding damages caused by normal use (normal wear and tear of the property or furniture).
The refund is reduced to one month if the check-in inventory is consistent /in line with the check-out inventory.
The timeline is assessed from the day the keys are returned by the tenant to the landlord or his representative (estate agent) in person or by registered letter with acknowledgment of receipt.
In the case of a condominium property, interim report is necessary and the landlord may withhold a provision corresponding to 20% of the amount of the deposit up to the annual report of the building’s balance sheet. The balance of the deposit is returned in the month following the approval of the building’s balance sheet. However, the parties may agree to settle all accounts immediately.

What if the landlord does not return the deposit on time?

Failing to return the deposit in a timely manner, the lessor will be required to pay penalties to his tenant. Indeed the deposit outstanding will be increased by an amount equal to 10% of the monthly rent excluding charges, for each month of delay started.
The increase does not apply if the tenant has not transmitted its new address and prevent the landlord to return the deposit within the time limits.
Regarding the amount withheld, the lessee may demand proof. The landlord must provide proof that the deduction is justified. On the other hand, it has no obligation to actually performing repairs or to replace the damaged object.

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2 Comments

  1. Kat Author August 22, 2016 (8:48 am)

    Hello!

    In a furnished rental, what if the dining room chair is damaged (for example: 1: the seam of the seating cushion is separating, or 2: the material on the back of the chair is torn with a big round circle). Is this considered wear-and-tear?

    If the landlord wants to deduct this from Security Deposit, how much can he allowed to deduct by law in CA?

    Thanks!

    Reply to Kat
    • Maud Velter Author March 24, 2017 (11:16 am)

      Good morning,
      I’m not specialized in Canadian applicable laws but when it comes to French law, in general, the tenant is required to engage their responsability concerning damages during their stay. If the chair was in a good state when you arrived and that it isn’t anymore when you’re about to leave, without it being related to its antiquated or a defect, the lessor has the right to deduct it from the security deposit. In French law, the amount of this deduction can be justified by drawing up a quote.
      Please excuse my late answer.
      Have a nice day!

      Reply to Maud Velter

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About me

Maud Velter
Maud Velter
Legal & practical advice for furnished rentals
Associate and Legal Director of Lodgis, furnished rentals and property law specialist