Why Pay A Caution Deposit For A New Apartment

Why should a new tenant pay a caution deposit for a new apartment? Have you ever asked this question as a tenant? well, let’s find out what caution deposit is about in this article…

A caution deposit, often referred to as a security deposit, is the sum of money required of a prospective renter to secure the use of the property’s amenities, furnishings, and equipment by the tenant for the duration of their rental. In addition to the yearly rent and other associated costs like legal, agency, and service fees, etc., this is one of the payments that new renters are obliged to make. Although most property owners and property managers charge at least 10% of the total rent paid as a caution deposit, there is no set proportion of the gross rent that serves as the caution deposit fee; being that the payment is a security against any form of contravention of the clauses spelt of in the signed Tenancy Agreement, the landlords try to achieve a reasonable sum that should enable future repairs when the need arises.

The purpose of the caution deposit is to ensure that tenants don’t destroy or damage any building components or amenities and then flee when their lease expires. It serves as a safety precaution against unruly occupants and preserves the property’s condition so that new renters can occupy it when the old tenants vacate.

The caution deposit is usually to take care of the following outstanding expenses incurred by tenants at sufferance:

  1. To pay up outstanding electricity bills incurred by tenants
  2. To repair damaged building components e.g. changing door locks, restoring punctured walls, fixing of broken tap/shower, replacing of water closet cover etc.
  3. To repaint the apartment when the tenant moves out.
  4. To settle outstanding water and waste disposal bills
  5. To offset rent and service charges owed in arrears before moving out.

Is Caution Deposit Recoverable By Tenants When Relocating?

Tenancy agreements typically include wording guaranteeing the tenant’s restoration of their security deposit if the property is returned to its original state or condition at the start of the tenancy. If the tenant complies with this criterion, the security deposit will be completely reimbursed. But if the property is damaged, for example, if any money spent on a new door key as a replacement item is lost or damaged, the landlord has the right to retain the remaining sum and return it to the tenant. The plan must be shared with tenants before the repair is completed. This includes giving the option to have the damaged door lock replaced or to agree to have caution used in its place, as well as a copy of the estimated budget and cost of the service.

What if the Caution Deposit is Not Enough to Fix the Damages?

If the amount paid as caution is not enough for repairs due to an increase in the cost of building materials and labour, the tenant may be approached to provide the balance, alternative the landlord can decide to add to available funds and get the door fixed especially if the tenant is not accessible or not forthcoming. There is usually no clause to back up this though since the landlord is expected to have known the estimate required from inception and mandated incoming tenants to pay.

When Not to Pay Caution Deposit

Some landlords won’t refund caution deposits to outgoing tenants, they may have used the money for a personal endeavour so it becomes difficult to refund at the end of the tenancy. If you think you may not be refunded, you don’t need to pay. Meanwhile, you’re not paying could mean that you might lose the apartment.

Caution deposits are usually for new or fairly new apartments with visible facilities, where the property is an old one with obsolete facilities, you shouldn’t pay a caution deposit.

If the apartment is such that you will spend a reasonable amount to give it a facelift, you shouldn’t pay a caution deposit

Where the amount paid as a caution deposit is not mentioned in the tenancy agreement that you signed, you don’t have to pay a security deposit.

Try to work out a possible decrease with the landlord if the caution deposit required exceeds 10% of the gross rent, especially if the flat is finished with high-end materials and equipment and has noticeable facilities.

If the caution deposit was not paid by previous renters occupying the same home.

when it is implied to you that the money you paid as a security deposit won’t be reimbursed.

when it is forbidden for you to look into the spaces designated for residents’ usage.

If there are any unpaid bills associated with the unit that need to be paid off, including accumulating waste management, water, or power bills.

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