Security deposit is the name given to a specific type of guarantee, whose main objective is to protect the creditor and financially assure him that the debt assumed by the debtor will be paid.
The “rent deposit”, “deposit check” or “deposit deposit” is already the second most used type of rental guarantee in the city of São Paulo, according to Secovi , second only to the guarantor. Under the Tenancy Law, it is the owner of the property who chooses the type of lease guarantee and not the tenant (tenant). The guarantee is chosen at the moment when the lease negotiation is taking place, before the signing of the lease. The rental deposit is mainly used in direct rent with the owner, as it is a simpler guarantee, but there are rules that must be understood and followed.
In this post we will go through the main doubts of property owners regarding this type of guarantee.
- What is the rental bond?
- How does the cash guarantee work?
- When can I use the rental deposit?
- How does the return of the rental deposit work?
- How do I know the amount of the security deposit that the owner must return?
- What is the deadline for returning the deposit?
What is the rental bond?
Security deposit is a guarantee that the landlord receives from the lessee (tenant) to have more security when executing the lease. This guarantee can cover both the grace period for payments and any damages that the lessee causes to the property. The form of payment of the deposit can be negotiated, however, most of the time this payment is made in cash for three months of rent. It can be done through a bank deposit in a savings account stipulated by the owner. In addition to cash, this deposit can be made with movable property (such as a car, motorcycle) and real estate (such as another apartment, land, and house).
If your tenant doesn’t pay rent and doesn’t want to leave, you can check out what to do in this blog post.
How does the cash guarantee work?
The tenant law says that the maximum allowed amount of the security deposit in cash is up to 3 times the rent. It is important to remember that the amount should only be deposited after the contract is signed. Savings must be combined in the name of the lessor and lessee. Every financial move made has to be officially communicated. Since when the lease is completed, the amount deposited and all its advantages (your earnings) must be reversed to the lessee.
§ 2 The cash deposit, which may not exceed the equivalent of three months’ rent, shall be deposited in a savings account, authorized by the Government and regulated by it, reverting to the lessee all the benefits arising from it when the withdrawal is made. Of the respective sum.
In practice, most of the time the lessee delivers the money to the lessor at the beginning of the contract. The landlord, in turn, either deposits the money in a private savings account or not. And at the end of the contract, return that money, with the necessary corrections, to the lessee. The correct thing would be to open a joint, non-joint, account in the name of lessor and lessee.
When can I use the rental deposit?
The amount may be used if the lessee fails to pay the rent, to cover any damage due to misuse that may be caused to the property, to pay fines for breach of contract and even possible necessary renovations. To know when to use the deposit amount, an inspection of the property must be carried out at the time of finalizing the contract. That way it is possible to know exactly what damages have occurred and the amount of the security that must be used to cover the damage.
How does the return of the rental deposit work?
This guarantee must extend until the end of the lease agreement, even if there is an extension of its term. Thus, for example, if the contract was initially adjusted for two years, but the lessee, after that period, remains in the property, the amount of his deposit will only be returned when the contract is terminated and the lease is definitively ended. At the end of the lease, with the tenant paying all payments and the property delivered in the same condition that it was rented, the owner must return the deposit money, together with the savings income. It is at that moment that the owner and the tenant redeem the money that is in the savings account.
How do I know the amount of the security deposit that the owner must return?
Through the website of the Central Bank of Brazil it is possible to survey the value. You need information such as:
- Date of deposit of the security deposit in savings;
- The security deposit amount;
- What date the value was withdrawn.
With this information you can make the account specifically for your case.
What is the deadline for returning the deposit?
The Leasing Law unfortunately does not stipulate a specific deadline for returning the deposit, however, considering that it does not require much bureaucracy for the withdrawal, it is reasonable that the withdrawal of the deposited amount is carried out as soon as the inspection of the property is completed and all outstanding issues are identified of the lease. If there are no pending or repairs to be carried out in the apartment, the amount must be returned as mentioned above.