What is the Difference Between a Bond and a Deposit? Here We Explain Them
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Are you going to sign a rental contract and do not know how the security and deposit issue works? Here we explain their differences.
Are you going to sign a rental contract and do not know how the security and deposit issue works? Here we explain their differences.
During this process, the doubt may arise about differentiating the concepts between bond and deposit when signing the lease, here we will explain it to you:
What is the rental bond?
The Urban Leasing Law (LAU) in article 36, establishes that the rental bond “is that amount of money that the tenant is obliged to deliver at the time of signing the contract”.
The bond is the payment that must be made in cash or bank transfer to the owner on the day of signing the contract. The amount is equivalent to one month’s rent and its purpose is to cover the costs of any damage done to the property.
Once done, the owner has to transfer the deposit in the corresponding body.
At the end of the rental contract, if all the clauses set out in the contract were fulfilled, the owner must return the money.
To comply with this, the lessor must request the deposit in the body where he had originally kept it. The owner has a maximum of 30 days from when the keys of the house are delivered to make the reimbursement.
However, as a tenant, if you want to recover your deposit, it must be clear that you must have met these requirements:
1 Notify the owner when you are going to leave the house.
2 Return the home in the same condition as it was given to you when the contract was signed.
3 Have no pending monthly rent payments.
What is a rental deposit?
The deposit or security deposit is a payment established by both parties (tenant and owner), the latest Royal Decree-Law on urgent measures regarding rent “limited the amount of the deposit to the equivalent of two monthly payments”.
The purpose of this is to protect the owner from future defaults, although it can also function as a payment for property damage.
It is mandatory to return the security deposit once the relations between the tenant and the owner have ended, as long as the tenant has complied with the payments and there have been no problems in the maintenance of the apartment.
Differences between bond and deposit
1 The deposit is not a monthly payment, but is agreed between both parties. The exact amount to be delivered must be included in the contract. The amount cannot exceed two monthly rent payments.
2 The deposit must not be delivered to the relevant body of the Autonomous Community, the bond must.
3 The payment of the bond is mandatory, while the deposit will depend on the agreement between the parties.
4 The bond is equivalent to one month of rental income, while the deposit deposit is limited to two monthly payments.
5 The bond can be renewed once the maximum duration of the contract has elapsed, while the deposit is not subject to renewal, as long as it has not been agreed.
If you have more questions about the legal bond and the security deposit, don’t worry! Leave us in the comments all your questions and we will be happy to answer you.
