Lease & Risk

The Deposit Is Not the Landlord's Money

A tenant pays a deposit at the beginning of the lease.

That does not mean the landlord has simply received additional rental income.

The deposit exists for a specific purpose and is subject to legal requirements.

This distinction becomes particularly important at the end of the tenancy.

A landlord may believe there is damage.

The tenant may disagree.

There may also be outstanding rent, utilities or other amounts that need to be reconciled.

The correct approach is not:

“I'll keep the deposit and we'll sort it out later.”

Instead, there should be a structured reconciliation supported by the lease, inspections, invoices, account records and the applicable legal requirements.

Good deposit administration starts long before the tenant leaves.

Keep accurate records of:

•   the deposit received;

•   where and how it is held;

•   amounts subsequently added where applicable;

•   relevant inspection records;

•   outstanding tenant accounts;

•   damage claims;

•   supporting quotations or invoices; and

•   the final reconciliation.

The deposit should never be treated as an informal emergency fund for the property.

South African residential deposits are regulated, and landlords should ensure that their handling, investment, inspection and repayment processes comply with the applicable legislation and lease.

Own the Property. Not the Admin.

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