Guarantees and rental deposits are two issues that are sometimes confusing and generate many questions among tenants. Knowing what they are, their differences, and how to manage them is essential to avoid disagreements when the rental agreement ends.
What is a rental deposit, and what is a guarantee?
Article 36 of the Urban Leasing Law establishes the distinction between a rental deposit and a guarantee:
• The rental deposit is mandatory and is equivalent to one month's rent. That is in the case of a residential property. When the property is for non-residential purposes, the deposit is two months' rent. The landlord must deposit it with the relevant official body.
• The guarantee is optional, and the amount must be agreed upon by the landlord and tenant. However, it cannot exceed two months' rent. The landlord would be in charge of holding the guarantee.
The rental deposit covers possible damage to the property or non-payment. Meanwhile, the guarantee is an additional precaution mechanism.
What could we deduct from the guarantee and the rental deposit?
The landlord must return both the guarantee and the rental deposit within one month of the end of the contract and the handover of the keys. Yet, they may retain part or even all of it if the tenants have breached their obligations.
Reasons for Withholding the Rental Deposit
The landlord may withhold the deposit in a variety of circumstances:
• To repair damage and defects in the home, furniture, or appliances that are not due to wear and tear.
• When the tenants have carried out work or renovations without the landlord's permission.
• To cover unpaid utilities by the tenant (water, electricity, internet, etc.).
• As compensation in the event of leaving the home before the end of the contract. The contract must consider that situation.
• Cleaning the home if it requires significant work.
• Legal expenses due to disputes with the tenant.
What could we deduct from the security deposit?
The guarantee or security deposit provides additional coverage. It can only be deducted whole or partially when the rental deposit is insufficient to cover the expenses incurred by the tenant's breach of contract.
Cases in which the property owner cannot retain the rental deposit or the guarantee
The owner cannot retain the deposit nor the guarantee to cover the monthly rent owed by the tenant. In addition, they do not cover the following circumstances:
• Existing damage to the property or repairs that are the landlord's responsibility.
• Improvements made with the landlord's approval.
• Expenses unrelated to the rental agreement or incurred outside of its term.
Tips to avoid discrepancies
To avoid problems when renting a home, it's a good idea to take a photographic inventory before signing the contract and note any considerable issues or damages. For landlords, we recommend keeping all invoices and requesting an expert report if the property shows significant damage.
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