Withholding of Rental Deposit

Withholding of Rental Deposit

Every lease agreement has two parties who both share rights and obligations towards each other and with regards to the relevant property.

Author: Nikki Baguley

The Rental Housing Act

Every lease agreement has two parties who both share rights and obligations towards each other and with regards to the relevant property.

In terms of The Rental Housing Act, the landlord’s responsibilities include maintaining the condition of the property at the onset of a lease period which should be fit for the purpose for which it is let.

The deposit, in full or part, may be withheld by the landlord on a tenant’s departure, in order to remedy damage caused by the tenant.

But what if the property was not received in a good condition in the first place? And what if no maintenance had ever been done by the landlord within the period of lease?

It is unfortunate when tenants do their part in terms of the general upkeep of the property or paying their monthly rent on time and still have to encounter problems in terms of arbitrary withholding of the rental deposit by the landlord.

Tenant Rights

According to the Rental Housing Act Section 5 (3);

“The landlord may require a tenant before moving into the dwelling, to pay a deposit which at the time, may not exceed an amount equivalent to an amount specified in the agreement or otherwise agreed to between the parties”

”The deposit must be invested by the landlord in an interest-bearing account with a financial institution and the landlord must pay back the tenant’s interest at the rate applicable to such account -which may not be less than the rate applicable to a savings account with a financial institution.”

“The tenant may during the period of the lease request the landlord to provide him or her with written proof in respect of interest accrued on such deposit, and the landlord must provide such proof on request”

“Any costs in relation to damages to the property claimed by the landlord, shall only be payable by the tenant upon proof of factual expenditure by the landlord.”

Repayment period of deposit

It is required that the deposit be repaid within a particular period which is determined by the circumstances of each case:

a)  If there are no Repairs –  the landlord has 7 days to return the deposit

b)  If there are some repairs – the landlord has 14 days to return the deposit

c)  If the tenant never committed to the joined inspection as required by the Act – the landlord has 21 days to return the deposit.

Joint Inspections

The joint inspection should take place in the beginning and end of the lease period.

It is stressed in the Rental Housing Act that two joint inspections are necessary by the landlord and the tenant. This would be the perfect opportunity to agree on the condition of the property  (and the already damaged items) when the tenant takes occupation.

It is advised to record and list all damages to the property at this stage, which could provide proof and support of a tenant’s claim should the landlord unreasonably withhold the deposit in future.

If the tenant is found during the exit inspection, to have caused damage, the landlord is within his/her right to deduct the costs from the deposit to cover the repairs of the damaged property.

Failure of attendance of joint inspection

A landlord who does not hold a pre- or post-occupation inspection forfeits the right to claim against the tenant at the end of the lease.

In other words, if the landlord misses a joint inspection when the tenants move out, the landlord would subsequently confirm that the property was in a good condition. 

It is thus essential that landlords should commit to the inspection before and after.

In case of damage to the property

The tenant and the landlord can agree that the tenant damaged the property and that the necessary repair expenses of the property would inevitably be deducted from the deposit.

The tenant and the landlord must agree on a reasonable quotation obtained from a contractor for purposes of repairing the damages.

The specific contractor is generally used based on quality of work, reasonable prices or references.

“Bonafide”  Tenants

Tenants are not liable for maintenance, unless expressly agreed with their landlord.

Landlords do not have the right to maintain a property with the tenant’s deposit if no damage was caused.

Landlords can therefore not implement improvements to the property with the intention of increasing the value of the property with the previous tenant’s deposit money.

A landlord is not allowed to use the deposit to finance undamaged property for instance the installation of a new extractor fan, installing a new stove or shower doors.

Landlords do however have the right to deduct a cleaning fee which could include the washing of carpets, cleaning an oven or removing mildew in the bathrooms.

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