Things you should know about your rental deposit

It is not unusual for landlords to request a deposit from tenants before they move into their property. However, landlords have a requirement where this deposit is concerned.

According to Nabeela Edris, an associate in the real estate practice at Cliffe Dekker Hofmeyr, it is mandatory for a tenant’s rental deposit to be placed in an interest-bearing account.

She says the Rental Housing Act No 50 of 1999 section 4B (b) and (c), states that a landlord may require a tenant, before moving into the dwelling, to pay a deposit which must be invested by the landowner in an interest-bearing account with a financial institution, “provided that the rate applicable to such account may not be less than the rate applicable to a saving account with that financial institution”.

The rental deposit may be equivalent to one or two months’ rent.

Together with any accumulated interest, the deposit is intended to be used by the landlord at termination of the lease to pay all amounts the tenant is liable for in terms of the lease agreement.

This may include the reasonable cost of repairing any damage done to the premises during the lease, the cost of replacing lost keys, any arrear rental the tenant has not paid the landlord during the lease, and any other amounts the tenant is liable for in terms of the lease.

Joint inspection

Edris does, however, note that according to the Rental Housing Act, on expiration of the lease, the landlord and tenant must arrange for a joint inspection of the property to take place, at a mutually convenient time within a period of three days prior to such expiration, with a view to ascertaining if there was any damage caused to the property during the tenant’s occupation.

“There is a view that the landlord is only entitled to deduct the cost of repairs from the tenant’s deposit if the above inspection was conducted,” Edris says.

Proof

The landlord is supposed to provide the tenant with proof that their deposit has been placed in an interest-bearing account. “In a circumstance where the landlord does not invest the deposit as stipulated above, it is deemed to have been invested,” says Edris.

She adds that in such a case the landlord will be treated as if they had invested the funds and will be liable as follows:

• In the event that no amounts are due and owing to the landowner in terms of the lease, the landlord must refund the deposit together with the accrued interest in respect thereof, to the tenant, without any deduction or set-off, within seven days of the expiration of the lease; or
• The landlord may apply such deposit and interest towards the payment of all amounts for which the tenant is liable under the said lease and the balance of the deposit and interest must then be refunded by the landowner to the tenant not later than 14 days after the restoration of the dwelling.

Adrian Goslett, regional director and CEO of Re/Max of Southern Africa, explains that rental agents act as the mediator between the two parties and are not “ultimately responsible for the behaviour of either party”.

“If serious legal disagreements arise, each party will have to enlist the help of an attorney to settle the issues,” he says.

He adds that should a dispute arise concerning the rental deposit, the parties can turn to their province’s rental housing tribunal. “The tribunal assists in mediating and resolving disputes between the parties.”

Goslett advises prospective tenants to familiarise themselves with their legal rights regarding a tenancy and their rental deposit before entering into a rental agreement.

“Knowledge of the relevant procedures can help prevent unpleasant and costly disputes down the line.”