The concept of collateral: what is it?
When renting out real estate, its owner bears certain risks: the sudden departure of a tenant without warning will lead to loss of income (until a new tenant is found)
, property damage or repairs will require certain expenses. The deposit is a certain amount of money, which is a guarantee that, firstly, the apartment will remain safe, and secondly, the tenant will not leave it unexpectedly before the end of the contract period.
If something like this happens, the deposited amount will automatically serve as a contribution for the last month of rent
or will be spent on repairs, purchase of furniture, interior design, and household appliances.
The deposit is also a kind of insurance in case the tenants cause material damage to the neighbors. In addition, this money can be used to pay off debts on utility bills left by the tenant. If the owner is warned in a timely manner, the tenant receives his money back.
The amount is reflected in the contract and is usually paid before moving into the rented apartment. The amount of the deposit is determined by the landlord, based on how he assesses the risks associated with strangers moving into his living space.
Rental security deposit: meaning and purpose
In current practice, apartments are most often renovated, with plumbing and furniture installed. The presence of these conditions means for the owner a potential risk that the property will be destroyed or damaged. Other dangers cannot be excluded:
- tenant insolvency;
- Neighbors Bay;
- non-payment of utility bills, etc.
A deposit when renting an apartment can protect the homeowner from these unfavorable prospects. This is the amount that is paid by future residents at the time of renting the living space to its owner. It plays the role of insurance in case of damage to furniture, plumbing, expensive repairs, or other unforeseen circumstances that entail material losses for the owner.
The security deposit is transferred at the time of renting housing. As a rule, it is equal to the monthly rental cost, but the parties can calculate a different amount based on the price of repairs, furniture, and other furnishings.
Art. 1064 of the Civil Code of the Russian Federation states that tenants who damage the property of the landlord are obliged to compensate for the material losses of the latter. This rule applies to situations where valuables were broken or destroyed due to improper treatment by temporary owners.
Art. 622 of the Civil Code of the Russian Federation introduces the concept of natural wear and tear of property transferred for temporary use. This means that tenants must return valuables to the owner in a suitable condition, but not in the same form as they were 5-7 years ago.
Lease agreement with security deposit: what should be specified
Execution of such a document is highly desirable if home electronics, household appliances, high-quality furniture remain in the living space, or if the apartment is being rented out after expensive renovations.
However, an agreement with a deposit is signed even in cases where “bare walls” with working plumbing are leased
(in case of sudden disappearance of residents)
. As a rule, the document records:
- information about each party;
- general information about the residential space for rent;
- monthly payment amount;
- the amount of the deposit paid before moving in;
- duties and responsibilities of the landlord and tenant;
- validity period of the signed agreement;
- conditions and possibilities for terminating the contract.
The payment of the deposit, as well as the subsequent transfer of the agreed amounts as monthly payment, is issued in the form of a receipt. The tenant must require a receipt and keep it until the end of the rental period, since in controversial cases the document will become the only confirmation of payment.
The agreement should only be concluded in writing, even if the landlord is a good friend, and the temptation is great to avoid unnecessary bureaucracy.
If housing is rented for a period of more than a year, the transaction must also be officially registered with Rosreestr, as well as the residents must be registered. If the last rule is not followed, the owner may face a fine.
Receipt requirements
The receipt is not at all a free essay on the topic of transferring funds, but is an important document that requires compliance with certain rules for its preparation. Mandatory certification by a notary is not provided for by law, but when we are talking about a decent amount or concluding an agreement through proxies, it makes sense to contact a government representative who will witness the transfer of money.
If you decide to do without a notary, it is important:
- clearly indicate that the amount transferred to the owner of the property is precisely the deposit (or deposit)
made in accordance with the rental agreement; - be sure to provide information about both parties;
- clearly record not only the place of transfer of money, but also the time of payment, down to minutes.
The main thing is not to forget that it is better to transfer money in the presence of witnesses who will confirm the transfer of the contribution and put their signatures on the receipt.
The agreed amount must be handed over only to the owner of the property or a person who is authorized to act on his behalf under a notarized power of attorney. Transferring money through an intermediary, even if it is an agent of a well-known company, is unacceptable; a realtor can only provide assistance in preparing documentation, but you must pay and take a receipt in person.
In essence, collateral and deposit are one and the same thing. Information about the deposit is indicated in the contract as a separate clause. It is also important to clearly state the purpose of the amount contributed by the tenant.
The document must clearly state that if the tenant leaves the apartment in its original condition, the money will be returned.
What is prepayment when renting an apartment?
Renting an apartment is not always cheap. However, the owner himself often faces material costs associated with damage to property.
To protect themselves from unlawful actions of tenants, some of them take a deposit when renting out real estate.
In this case, everything is fair: if the tenant is conscientious, he has nothing to fear, because as a result, he will still return his contribution, and the owner thereby gains certain guarantees.
What does a deposit mean when renting an apartment?
A deposit when renting an apartment is, in essence, a guarantee of the security of the property for the owner. Even if it gets damaged, the damage will be reimbursed from the tenant’s wallet.
The security deposit paid for renting an apartment is also called a security deposit.
As a rule, the amount of the security deposit is equal to the monthly rent, but the owner has the right to set his own rates. It is the tenant's right to agree or not.
If the apartment is rented through an intermediary, that is, through a real estate agency, the costs will be even higher. The tenant will have to additionally pay for the services of specialists.
When renting residential space, lawyers strongly recommend drawing up a lease agreement. And when paying a deposit, it is required. After all, there is a transfer of money that is not documented. Moreover, the amount exceeds the rent. Neither the landlord nor the tenant is insured against dishonest actions of the other party.
The lease agreement does not require notarization. Exceptions are agreements concluded for a long period (from 1 year or more).
When drafting your lease, make sure that it includes a security deposit clause (if applicable) and the exact amount.
The owner of the property must return it to the tenant upon termination of the tenancy if the condition of the property is satisfactory.
Otherwise, part of the deposit or the entire deposit, depending on the amount of damage caused, goes towards eliminating the problems.
The legislative framework
The current legislation does not contain the exact concept of “deposit for renting an apartment”. Therefore, relying on regulations, it is impossible to regulate the size of the security deposit. The owner can only be guided by his convictions.
It is noteworthy that paying security deposits when renting housing is widely practiced in the United States and European countries. And this is under the control of insurance legislation.
Prepayment and deposit when renting an apartment: differences
Advance payment and deposit are completely different things . Prepayment (deposit) - part of the amount of the rent paid in advance.
It is necessary so that the property owner receives certain guarantees about the serious intentions of the tenant. The tenant pays the rest of the amount later, after signing the contract or verbal agreement.
Nobody returns the deposit to anyone; it is included in the total rent.
As for the deposit, it is considered separately from the rent. With its help, the tenant confirms his intentions and guarantees the integrity of the owner’s property. The tenant collects the deposit upon expiration of the lease agreement.
The concept of a deposit, the consequences of termination and failure to fulfill obligations to secure it are regulated by Art. 380 and 381 of the Civil Code of the Russian Federation .
Conditions for returning the deposit
According to legal regulations, the deposit is a refundable amount . That is, after termination of the lease agreement, the amount transferred by the tenant to the landlord is returned back to its rightful owner.
As with the transfer of a deposit, its return is confirmed in writing. The document indicates the technical condition of the apartment, the degree of wear and tear, data on the absence of rent arrears, etc.
Conflict situations often arise between tenants and owners. The causes of disputes are disagreements regarding the condition of the property.
In this regard, the apartment owner refuses to return the deposit in whole or in part. The fact is that not everyone takes into account the natural wear and tear of the property, which is inevitable during long-term rentals.
Such a misunderstanding is not surprising, since it is more profitable for the owners to carry out restoration at the expense of the tenant.
To resolve the controversial situation with the return of the deposit, the parties go to court.
An example is the following. Loose hangers and washed-out carpet are natural wear and tear caused by time, not the actions of the tenants. And scratches on furniture and a broken window are damage to property, compensation for which can be deducted from the security deposit.
Drawing up a lease agreement and transferring a deposit
The standard rental agreement is as follows:
- tenant and landlord information;
- description of the condition and technical characteristics of the apartment;
- terms of the lease (this includes the amount and terms of the lease, the rights and obligations of the parties, the amount of the deposit paid).
Also, when transferring the collateral, you should issue a receipt indicating the amount and information about both parties . It is not necessary to have it notarized. However, funds must be transferred in front of witnesses. At the end of the receipt, not only the parties to the agreement, but also the witnesses must sign.
In addition, the contract must contain a section “Terms of payment”. It clearly outlines the procedure for applying the security deposit.
Thus, the apartment owner does not have the right to use the transferred money for his own needs. They are intended only in case of compensation for damage to property caused by the tenant.
Thus, a certain amount specified in the contract is transferred to the owner for safekeeping.
In addition, it is important to indicate the procedure for accepting the apartment, as well as the conditions for returning the deposit if there is no damage to the property. The agreement allows the security deposit to be used for the following purposes: to eliminate the consequences of damage and towards rent (with the consent of the tenant).
Note! Some lease agreements contain information that if the tenant lives in the apartment for less than 11 months, the owner has the right not to return the deposit. Therefore, it is important to first familiarize yourself with each clause of the document before signing it.
How to reduce financial burden – installment deposit
If a preliminary agreement has been reached on all other issues, and the property owner likes the potential tenant, the property owner may agree to pay the deposit in installments - along with a monthly contribution. Of course, not every owner will do this (there are still risks)
however, if you convince the landlord of your integrity, you can at least try to negotiate this
(and be sure to record the result of your efforts in the contract)
.
Most often, the amount of the deposit is taken equal to the monthly payment, but this is not a mandatory rule - the landlord has the right to set it at his own discretion.
On the other hand, if you bargain and present compelling arguments, you can significantly reduce it.
If you follow all the rules specified in the agreement, keep the apartment clean and, as required, notify the owner a month in advance of your intention to leave the home, you can count on the return of the deposit or its “offset” in the form of the last monthly payment.
It should be noted that in case of large losses, the amount of the deposit may not be enough to cover them. But still, in addition to financial security, the deposit plays an important psychological role - it disciplines the tenant and forces him to treat the property more carefully and weigh his decisions if he wants to change his place of residence.
Families with children and pet lovers will have to put up with a full deposit requirement (for obvious reasons)
. Moreover, experts recommend that owners even increase it in such cases. It is highly not recommended to hide the fact that children and their four-legged friends will live in the living space in order to reduce the deposit.
False information is an ironclad reason for unilaterally breaking the contract, and then the deposit will not be returned for sure.
How is the deposit refunded?
When tenants move out, the owner of the property is obliged to return their money if the property is transferred without damage. To avoid conflict situations, at the time of signing the contract, the parties draw up and sign an act of acceptance of valuables, which lists pieces of furniture, plumbing fixtures, etc., and makes notes regarding their original condition.
When assessing the returned property, the owner of the living space must take into account natural wear and tear. For example, if the hinge on a closet door has broken, or the paint has slightly peeled off the table, this will not be a reason to withhold amounts from tenants. The basis for leaving a deposit will be damage to previously transferred valuables, for example, a broken mirror, broken taps, a broken window, a broken sofa, etc.
Refunds follow the same algorithm as the initial transfer. They can be provided to tenants in cash or by bank transfer. In the first case, the supporting document will be a receipt endorsed by both parties to the transaction, in the second - a bank statement.
A security deposit is a recognized way to ensure the interests of the landlord. It protects him from a situation where tenants destroy valuable property but refuse to pay for the damage. If the valuables are transferred to the owner intact, the funds must be returned.
Is it possible to do without collateral?
It is unlikely that you will be able to find housing without a deposit in a short period of time, but there are still 10%-20% of property owners on the market who are willing to take a risk and let guests in on their word of honor. In this case, however, most apartments rented without a security deposit do not have high-quality renovation and furniture. However, many tenants are looking for just such a very budget option, which, by the way, is very suitable for long-term rental for those who have their own furniture and who still make repairs before moving in.
If you try, you can rent out housing without collateral, equipped with everything you need, but for this you need to use all your diplomatic skills. If the contract is certified by a notary, and the information is recorded in Rosreestr, it is easier to reach an agreement on the absence of a contribution. In any case, you should describe the property and draw up an acceptance certificate.
In what cases can you do without a deposit?
In some cases, there may be no security deposit, for example, if:
- the tenant is given a completely empty apartment, without furniture or equipment, that is, there is nothing to spoil;
- the apartment is in poor condition and requires significant repairs;
- rent is paid weekly or 2-3 times a month, which allows the landlord to check his property in a timely manner;
- it is not an apartment, but a room that is rented, while the landlord lives in the same apartment and has the opportunity to constantly monitor the condition of the property;
- the landlord is not afraid of possible expenses and damage to property, which is not considered illegal, since the requirement and payment of the security deposit is considered voluntary.
Pledge and deposit: consonant words with different meanings
When renting residential real estate for a long time for the first time, many people unknowingly equate the concepts of “deposit” and “deposit”, although these are fundamentally different types of contributions. A deposit is paid in cases where, for example, after much effort, the desired apartment has been found, but there is still no full amount for the first payment, or the execution of the contract and the move must be postponed for a while. In this case, a certain amount is transferred to the owner against receipt, which will serve as a guarantee that the potential tenant will not change his mind, and the apartment will be rented out within the agreed period and for the specified period.
The deposit agreement is a contractual document (appendix)
, where the amount is written down and the address of the property for which the rent is paid, as well as passport information about the tenant, must be indicated. Once the contract is signed within the agreed period, the deposit becomes part of the rent. If this does not happen due to the inability or unwillingness of the tenant to rent housing, the landlord has every right to keep the money for himself.
According to the law, if the owner finds guests who are ready to move in immediately and pay more, he is obliged to return the deposit in double amount.
To avoid problems and misunderstandings, all the nuances of financial obligations and settlements must be recorded in the contract.
How is a security deposit different from a pledge?
What is a deposit when renting an apartment? This is a method of insuring possible risks of the owner, designed to reduce to zero or minimize monetary losses in the event of improper handling of the transferred property by residents.
A deposit is not a synonym or an analogue of a pledge. The latter is used as a guarantee that the parties will not refuse to enter into an agreement. For example, if the tenant changes his mind about renting the living space, the previously transferred deposit will remain with the owner. The second purpose of the deposit is to insure the owner in case of insolvency of the tenant.
The deposit amount is fixed; it does not depend on the price of furniture installed in the apartment or the cost of repairs made by the owner. It is transferred at the time of renting the property and is usually equal to one month's rent.
The landlord does not return the deposit - what to do?
It happens that all the requirements are met, the owner is warned in time about the need to look for new tenants, but there is reason to believe that he is trying by all means to avoid returning the deposit. He makes unscheduled visits to the apartment, finds fault with the smallest stains and abrasions, proves that the toilet tank worked much more efficiently, and the washing machine now does not turn on the first time.
Without proper preparation, it is difficult to resist this, but it is still worth extracting the contract, calmly arguing your position and declaring your readiness to involve a lawyer and file a claim in court.
In order to stock up on facts and evidence, you should take the time to briefly describe the condition of the apartment in the contract, inspect the property very carefully and take photos of obvious flaws, and also ask the owner of the home to certify these photos with his signature. If, after moving in, something previously unnoticed comes to light, you should not remain silent, but call the owner of the property for additional negotiations and reach new agreements. With such a serious approach, getting the amount back will be much easier. In situations where the property is really damaged, unfortunately, you will have to say goodbye to the money.
Obvious improvements made by tenants that were not to the landlord's taste often become a stumbling block.
To avoid this, all repair work must be coordinated in advance, and when changing, for example, a door handle, be sure to keep the same one.
