Blair Atwebembeire.
In the world of renting, security deposits have long been a topic of contention, with tenants often expressing concerns about their hard-earned money. This financial aspect of renting can be a source of worry for tenants, with stories of landlords withholding deposits or out rightly rejecting refund requests. Amidst the rumors and misconceptions, allow me shed some light on the truth about security deposits and their legality.
What exactly is a Security Deposit?
A security deposit is a sum of money paid upfront when entering a rental agreement. This amount, typically held by the landlord throughout the tenancy, serves as a safeguard against any damages caused by the tenant. Crucially, a security deposit is separate from the monthly rent.
Under Section 30 of the Landlord and Tenant Act 2022, it is stated that a landlord shall require a tenant to pay a security deposit to ensure the tenant’s obligations during the tenancy are met. Importantly, the law sets clear limits on the amount a landlord can demand – no more than the rent for one month or one-twelfth of the annual rent, whichever is lower.
Is Charging a Security Deposit Mandatory?
While the language in Section 30 may seem mandatory due to the use of “shall,” it’s essential to recognize that tenancy is a contractual agreement based on mutual understanding between tenant and landlord. A landlord has the option not to charge a security deposit, but if they do, it must comply with the legal limits.
The Bottom Line: Charging Security Deposits is NOT Illegal.
The law stipulates that a landlord must provide written terms and conditions to the tenant, explaining under what circumstances the security deposit, or any portion of it, may be withheld upon termination of the tenancy. Importantly, normal wear and tear resulting from ordinary use of the premises cannot be a reason to withhold the deposit. Furthermore, the landlord must provide a written receipt for the security deposit.
Your Right to a Refund
Tenants have the right to demand the return of their security deposit, or a portion of it, when their tenancy ends. A landlord cannot simply refuse to refund the money; there must be a justifiable cause, and it must align with the terms of the tenancy agreement. It’s advisable to include a clause in the agreement that mandates a proper assessment to determine the cost of any necessary repairs, should damage occur. This assessment can help decide how much of the security deposit should be retained.
Change of Ownership
In cases where the property changes ownership during a tenancy, the security deposit should be transferred, and the new landlord must inform the tenant of this change. Furthermore, if a tenant’s premises are foreclosed upon during the tenancy, the deposit must be promptly refunded by the foreclosed-upon owner after the sale or transfer.
This means that tenants need not worry about a new landlord suddenly demanding a fresh security deposit or charging for previous damages once the tenancy is terminated.
Security deposits are a common practice in the world of renting, but they are not illegal. They serve as a financial safeguard for landlords while offering tenants peace of mind during their stay. The key is transparency and adherence to the law. If you’re a tenant, make sure you understand your rights, and if you’re a landlord, be sure to communicate clearly with your tenants about the terms and conditions of the security deposit. A fair and just approach benefits everyone involved in the rental journey.
Mr. Blair Atwebembeire is an Advocate of the High Court of Uganda. E-mail: blair.advocates@gmail.com
