What is a Tenancy Deposit?
A tenancy deposit is a certain sum of money that you pay to a landlord before moving in to your desired housing unit that acts as protection/security for the landlord should you cause damages within your unit, fail to pay rent on time or breach the terms of your lease. Note that this security deposit has to be paid before you can move into your preferred unit. Should you damage your rental unit (or the items within), fail to pay rent arrears on time or breach the terms contained in your lease agreement, your landlord has a right to indemnify themselves by deducting all the expenses incurred when repairing damages in your unit or your rent arrears from your security deposit.
What Does a Tenancy Deposit Cover?
Most landlords usually ask for a tenancy deposit to protect themselves from problematic tenants. Your landlord can use your tenancy deposit to cover the following:
- Rent arrears
- Any losses incurred once you breach the terms of your lease
- The expenses incurred in fixing damages that occurred during your stay in a property. Note that your landlord can only charge you for damages that are considered to be above what would conventionally be considered ‘normal wear and tear’
- Any unpaid utility bills at the time your lease expires
- Expenses incurred undoing any arbitrary renovations you made to your unit during your stay
- The costs of cleaning your property and other expenses that may be incurred to return your property to its original condition before you moved in
Is a Tenancy Deposit Refundable?
Yes. The money that you give your landlord as a security deposit usually remains yours but there is a catch… On providing a security deposit to your landlord, they are required by law to deposit the money in an escrow account until the time when your lease expires. This means that as long as you have an active lease, you cannot access your tenancy deposit. However, if you are planning on terminating your lease, you should inform your landlord in writing of your intention to vacate their property and request for a refund of your tenancy deposit.
Note that though all the money you give as a tenancy deposit is refundable, your landlord may deduct a certain percentage from your deposit when you terminate your lease. However, your landlord cannot deduct money from your deposit arbitrarily. Your landlord should first write to you explaining their intention to deduct a specified amount from your deposit. The landlord’s letter of intent should be accompanied by a comprehensive account of why they are making deductions.
If you are not satisfied with the reasons provided by your landlord for deducting money from your tenancy deposit, for example if you feel that the amount to be deducted as expenses for carrying out repairs is exorbitant, you can lodge a tenancy dispute claim against your landlord.
What is a Tenancy Deposit Claim & How is it Handled?
A tenancy deposit claim is a type of case that is usually initiated (usually by the tenant) when both the tenant and landlord cannot agree on the deductions to be made from the security deposit or when a landlord unlawfully refuses to return a tenant’s deposit.
Most tenancy deposit claims are usually successfully handled through mediation but if mediation does not bear any fruits, you can file your claim in a court of law.
Note that different States uphold different variations of tenancy deposit laws. If you are planning on lodging a claim against your landlord, brush up on the local tenancy laws to understand your rights, statute of limitations for filing a claim and what to expect when your claim case is concluded.
On lodging a tenancy claim, some of the results you can expect once the case is heard and determined by a judge include:
- A full refund of your security deposit plus interest
- A partial refund with the landlord being allowed to make approved deductions
- Punitive damages awarded against the landlord in your favor especially if the landlord violated your rights as a tenant
Note that the eventual outcome once you lodge a tenancy deposit claim will be dictated by the unique facts surrounding your case.
To bolster your chances of getting a favorable outcome in a security deposit claim case, ensure that you:
- Attach a copy of your lease agreement
- Provide a strong argument on why you believe that your rights as a tenant were violated citing your responsibilities as per your lease agreement and the breaches you may have made against the agreement (or lack thereof)
- Table clear, concise and accurate records of the financial transactions between you and your landlord
- Include copies of all correspondence between you and the landlord in regards to your tenancy deposit such as your letter of demand for a refund and the landlord’s responses
- Any supporting evidence you may have collected to prove that you are not at fault such as videos showing the state of the property at the time you leased it and when you move out
- Any other evidence such as witness testimony from other tenants that may help show that you are not at fault or you are being subjected to unfair treatment