In terms of the Rental Housing Act 50 of 1999, a deposit must be held in an interest-bearing account as the landlord’s security for any damage the tenant may cause to the property, or for rental arrears or any relevant amount owing. African News Agency (ANA) Archives
Durban - A TENANT is not under legal obligation to pay a deposit in terms of the Rental Housing Act 50 of 1999, but the landlord is legally allowed to ask for a deposit, the amount to be agreed between the parties.

The act does not specify or define a deposit, and parties to a lease as well as the tribunals may refer to it as rental, security or damage deposit. Some leases also include a deposit for utility charges (electricity and water). All deposits are refundable with interest at the end of the lease, if no amount is owing to the landlord.

Where deposit is paid based on a contractual agreement, the act imposes certain conditions if the deposit is paid to the landlord. The deposit must be held in an interest-bearing account as the landlord's security for any damage the tenant may cause to the property, or for rental arrears or any relevant amount owing. The bank's interest rate in which the deposit is held must not be less than the rate of its savings account.

The deposit is regulated through what is referred to as the “deemed” provisions. In other words, even if the landlord fails to invest the deposit in an interest-bearing account with a financial institution, it is deemed or treated as if that is how it was done. In terms of the “deemed” provisions, neither the tenant nor the landlord can waive his or her rights.

The accrued interest not only benefits the tenant, but the landlord as well. The landlord may find it necessary to carry out repairs for damages done by the tenant, his or her family or visitor, and is legally allowed to use the deposit as well as the accrued interest to mitigate whatever loss was suffered.

When should a deposit be refunded?

At the end of the lease period with the following conditions:

* Within seven days when no amount is owed due to arrears, damage to the dwelling or repairs required by the landlord.

* Within 14 days when an amount is owed to the landlord in respect of arrears rental or cost of repairs for which the tenant was responsible.

* Within 21 days when a tenant refuses joint inspection.

The landlord has a total of 21 days from the time the tenant has moved out or became aware that the dwelling was abandoned by the tenant, to inspect the dwelling, carry out repairs and deduct the cost of repairs, arrears rental and cost of lost keys and to refund any money available.

Section 5(3) (g), (i), (j), (* ) and (m) of the act deals with the refund of the deposit with accrued interest under different circumstances of the lease coming to an end.

What amount is to be paid?

The amount to be paid depends on the agreement between the landlord and the tenant. It could be an amount equal to one month's rental or any amount agreed upon between the parties {section 5(3) (c)}.

What must the landlord do when he or she receives a deposit?

Give the tenant a receipt in which the following must be written:

* Date the deposit was paid.

* For deposit and the amount.

* Tenant’s name, address of the dwelling for which deposit is paid, the type of dwelling (eg flat, room, garage or cottage).

* Landlord’s signature.

Invest the deposit with a bank in an interest-bearing account.

Provide the tenant with written proof of accrued interest when the tenant makes a request.

A receipt must be issued even if the tenant made payment into the landlord's bank account.

Where there is a dispute regarding the tenant's refund of the deposit, the tenant can lodge a complaint of an unfair practice with the Tribunal. The landlord can lodge a counter claim if the amount due exceeds the deposit.

The legal principle is that the tenant's deposit is refundable since it belongs to the tenant. The deposit is held by the landlord as security for any damage caused to the property by the tenant during the lease period, including cost for replacing lost keys, remote controls, utility charges and any other money owed to the landlord.

If a tenant is legally entitled to cancel for breach and vacates the property, the deposit is refundable in full, in the absence of any damage to the property (an unreportable case, in Herr v Innomet Projects (Pty) Ltd 2016 ZASCA 82).

Professor Henk Delport states that a landlord cannot deduct from the tenant's deposit if no inspection was done jointly with the tenant.

“Should the landlord fail to inspect the dwelling in the presence of the tenant, he is deemed to acknowledge that the dwelling is in good and proper state of repair.”

It is the responsibility of both parties to carry out the joint inspections. While the act does not indicate who should initiate the inspections and arrange a mutual time, the landlord is responsible for his or her property, the lease agreement and the deposit.

Section 5(3)(f) of the act states that at the expiration of the lease, the landlord and tenant must arrange a joint inspection of the dwelling at a mutually convenient time to take place within a period of three days prior to such expiration with a view to ascertaining if there was any damage caused to the dwelling during the tenant's occupation thereof;

(j) Failure by the landlord to inspect the dwelling in the presence of the tenant as contemplated in paragraphs (e) or (f) is deemed to be an acknowledgement by the landlord that the dwelling is in a good and proper state of repair, and the landlord will have no further claim against the tenant, who must then be refunded, in terms of this subsection, the full deposit plus interest by the landlord.

Dr Sayed Iqbal Mohamed is the chairperson of the Organisation of Civic Rights and deputy chairperson of the KZN Rental Housing Tribunal. For advice, contact Pretty Gumede or Loshni Naidoo on 0313046451 or [email protected]

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