What you need to know about security deposit for renting an apartment
Renting an apartment without security deposit is rare. When planning to rent an apartment for a long term, the tenant should be prepared to have to give the owner of the apartment a rather large sum of money at once. Usually the tenant pays the first and last months. Let's take a closer look at what a deposit is when renting an apartment, why the landlord may insist on it, in what amount it should be paid and how to make this deposit correctly.
What is a security deposit when renting an apartment
A tenancy deposit is a specific amount of money that the tenant gives to the landlord as a guarantee of compensation for damaged property or non-compliance with the terms of the contract. If the property is intact and the tenant has adhered to the terms of the lease, the landlord must return the deposit upon eviction.
What types of rental deposits there are:
Guarantee. This type of deposit is better known as a "last month's rent". It may not be very convenient for tenants when they move in, but it makes things much easier when they move out. A security deposit protects the landlord from insolvent clients. If tenants are unable to pay for the next month, they will have 30 days paid from the security deposit to find a more affordable place to live.
Security Deposit. The amount of the security deposit is agreed upon by both parties when signing the lease. This deposit guarantees that the tenants will fulfill certain obligations. Usually, this deposit covers the owner's risks in case the tenants damage the property, for example, if furniture or appliances break down.
In most cases, the landlord and tenant agree on one type of deposit. If the apartment has expensive furniture and appliances, the owner may insist on a security deposit. Still, most often in Ukraine a security deposit is used, i.e. payment for the first and last months.
Why they ask for a deposit when renting an apartment
A security deposit is a guarantee that the tenant will fulfill his or her obligations to the landlord. The tenant agrees to return the property to the landlord in the same condition in which he or she received it and to pay any debts incurred during the rental period.
If a tenant has violated the terms of the rental agreement, for example, by not paying rent on time or damaging the property, the property owner has the right to cover their expenses from the deposit. The same applies if the tenant has not paid for utilities. If a debt has accumulated and unscrupulous tenants have moved out without warning, the owner will be able to pay the utilities from the deposit money.
A security deposit is an important component of a lease agreement, which secures the interests not only of the landlord, but also of the tenant. The latter gets access to the housing, and the owner is guaranteed that his property will be returned in proper condition at the end of the lease term.
What kind of deposit should be required when renting an apartment
Most often the deposit is in the form of a sum of money, although in some cases it may be a variety of property of the same value as the deposit. The cash deposit can be in the amount of one month's rent, although not uncommon situations where the landlord asks for an amount equal to 2-3 months of rent payments. In Kyiv, a common solution is to pay two months' rent in advance.
When it comes to daily rentals, in most cases the client leaves a deposit when booking the apartment. This is a guarantee for the owner that the tenant will not change their mind at the last moment. Usually, if the reservation is canceled less than 24 hours before the start of the rental, the deposit is not refunded. If the client still rents the apartment, the deposit is calculated from the full amount of payment.
How to properly execute a deposit when renting an apartment
The security deposit for renting an apartment depends on the type of deposit the landlord insists on. There is no legal justification for a security deposit. Most often, a standard lease agreement is used.
What points are important to spell out in a lease agreement when transferring a security deposit from one party to another:
the amount of the security deposit;
opportunities and deadlines for the return of the deposit;
situations in which there is no provision for the return of the security deposit.
The landlord may specify in the contract that the security deposit is non-refundable if the tenant has not given one month's notice of eviction. If a security deposit has not been provided separately, the security deposit may also cover the repair of broken furniture or appliances. It is also important to specify this in the rental agreement.
Unlike the security deposit, the security deposit is regulated by law (Article 546 of the Civil Code of Ukraine). It represents the amount that is prescribed in the lease agreement and is held by the owner of the apartment. In this situation it is obligatory to draw up an addendum to the contract.
Here's what's important to specify in a lease addendum:
condition of the apartment at the moment of its transfer for rent (detailed description of furniture, appliances, plumbing, etc.);
The responsible person who is charged with the obligation to pay for utilities;
the responsible person who carries out maintenance/capital repairs in the dwelling;
the procedure for agreeing on the damage and the amount to be written off from the deposit;
opportunities to return the security deposit in full.
In order to ensure that neither party loses money, it is important to be careful when drawing up an addendum to the lease. If the landlord is worried that the property will be damaged, he must specify everything in the document in as much detail as possible. In turn, the tenant is obliged to check the described property so that no unreasonable claims can be made against it later.
The procedure for writing off money deserves separate attention. Lawyers recommend prescribing a double approval system in the lease agreement. The landlord charges a certain amount for damages, the tenant agrees to it, after which the amount of write-off is specified in an addendum and notarized. All of this may seem quite complicated to implement. But it is an opportunity to reduce the risks of both parties. Having a deposit is an insurance for the property owner, while the need for legal formalization is an insurance for the future tenant.
When the rental deposit is non-refundable
When a tenant is evicted from an apartment, the tenant has the right to get the deposit amount back. But there are situations when the housing deposit is not refundable. In which cases the landlord may not return the deposit to the tenant:
the tenant did not give notice of his intention to move out within the time specified in the lease;
the landlord discovered signs of damage to the property at the time of acceptance of the apartment when comparing the acceptance certificates;
the tenant failed to perform current repairs, which forced the landlord to perform them himself.
These situations can cause both non-refund of the full amount of the deposit and partial refunds, for example, if compensation for damaged property can be covered by less than the entire security deposit.
Is it possible to do without a deposit when renting an apartment?
Renting an apartment without a security deposit is realistic in theory, but in practice it is quite difficult. There are few such offers on the rental market, as apartment owners do not want to risk their own property and money.
It is possible to rent an apartment without a deposit only through acquaintances. In such a situation, the owner is more willing to meet you and can waive the deposit. But it is important to realize that both parties bear the risks, especially if they do not sign a rental agreement.
If you want to rent an apartment in Kyiv or rent your home to bona fide tenants, it is best to enlist the help of a realtor. The real estate agency "Mayak" has a database of apartments for rent, and a database of clients who rent housing for a long term. Realtor knows all the nuances and pitfalls of long-term rent, so he understands what points to consider in the contract and addendum to avoid unpleasant situations. In real estate agency "Mayak" has its own legal department, whose specialists will help to draw up the right lease agreement, where the interests of the landlord and tenant will be taken into account.
