What is a security deposit? and what does a security deposit cover?
When it comes to property and the financial matters related to it, there’s a certain unavoidable complexity we all want to stay away from, but we just can’t.
Security deposits are the essential element of tenancy. A security deposit is not exactly an advance payment for the damages that could occur during the period of tenancy but a goodwill gesture, an assurance agreement that the tenant will adhere to all the principles of the contract signed between the two parties and will take care of all the things listed in the agreement. The security deposit is a guarantee by the tenant that the property will remain safe and will be handed back in the same condition, otherwise, the owner can retrieve the damage through the security deposit.
The amount of the security deposit is usually equal to the rent of one month, but that depends entirely upon a mutual consent which is stated in the form of a written agreement signed by them. The amount of the security deposits may vary in different situations.
A security deposit is submitted at the time of executing a lease of a given property, a home, building, shop, an office or any other constructed area for which a monthly rent is paid by the tenant. Security deposits are usually refunded after the tenant leaves the house, after a complete and thorough examination of the property by the owner.
Even though the security deposit is not supposedly a payment to recover or replace damages, it is somehow used in many cases as one. In the event of damages to the property or the furniture, it is obligatory for the tenant to pay for them before leaving the property. However, when the tenant refuses to do so or pays lesser amount than assessed, the owner deducts the damage charges from the security deposit. In the case of an emergency, where the damage is done as a result of an accident or incident, the owner sometimes uses the security deposit to repair the damage. In such scenarios, most of the times, the tenant hesitates to pay for the damage and the owner finds it fair to use the security deposit for an inevitable replacement.
Security deposits are also favorable for the owner as it saves them from the trouble of contacting the tenant if he leaves the property without informing, in which case he can keep the security deposit as the rent of the month.
Security deposits save the owners from a lot of trouble and it is mandatory for tenants to pay it when he moves in the house. In rare cases, where tenants are cautious and keep the house in an even better condition than the time of moving in, the owners happily refund the security deposit. A tip given by all real estate agents is to list the things carefully in the agreement which may later cause a rift between both parties, and also the security deposit must be fixed at an amount acceptable to them.
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