Rental deposit: what's the difference between a deposit and a security deposit?

There's a lot of confusion between security deposits and surety bonds, but it's a hard one. The main reason for this is that the word "caution" is often misused to refer to the security deposit. On a purely etymological level, it's true that a deposit can refer to a sum of money paid as security. But in real estate law, there is a clear difference between a rental deposit and a security deposit.

The definition of a security deposit

To give the simplest definition of a security deposit, we need only look at the words that make up the notion.

The "deposit" of a sum in the hands of the landlord

As the name suggests, this is a deposit of money. The tenant gives the landlord, who collects it, the sum specified in the lease. This sum will no longer be available to the lessee, but will become available to the lessor for the duration of the lease, without being subject to revision or accruing interest.

The amount of the security deposit varies according to the type of rental:

• Security deposit for empty accommodation: this may not exceed 1 month's rent,
• Security deposit for furnished accommodation: limited to 2 months' rent, except in the case of mobility leases, where no security deposit is required.

When the security deposit is paid by cheque, it can also be confused with a "deposit cheque". The latter is only cashed under certain conditions, whereas the security deposit cheque is cashed in all cases.

Guarantee" of the property's condition

This sum guarantees the lessor's contractual obligations with regard to the condition of the property. After the lessee's departure, an inventory of fixtures and fittings is drawn up and compared with the one drawn up when the lessee took possession. If there is a discrepancy between the two, the landlord can use the security deposit to make good any damage caused by the tenant.

Definition of a rental deposit

The main difference between a rental deposit and a security deposit is that a rental deposit is not a sum of money.

A person to pay on the tenant's behalf

A security deposit is in fact a legal act by which a person undertakes to take the place of the tenant in the event of the latter being unable to meet his or her payment obligations. This person then becomes the lessee's guarantor, also known as the "surety", against whom the lessor can turn in the event of need. If the guarantor signs :

• A joint and several guarantee, the owner has the right to turn to either the tenant or the guarantor as soon as the first payment is not made.
• Under a simple guarantee, the owner must first exhaust all recourse against the tenant before asking the guarantor to pay.

In all cases, the guarantor makes no payment to the landlord when the lease takes effect, as his or her intervention remains hypothetical.

Rental debt guarantee

The rental guarantee covers all debts that the tenant may owe to the lessor, his creditor. In other words, the landlord can ask the guarantor to reimburse rent and service charges, as well as any work required to restore the property, if these are the result of the tenant's actions. However, the landlord must prove that the sums claimed are justified.

Security deposit and rental deposit: different procedures

Neither the security deposit nor the rental deposit are legally binding on the signing of the lease. They are simply securities that can be used simultaneously or separately, and which prudent landlords can request from their tenants. However, they operate differently.

Withholding the security deposit

When it comes to withholding security deposits, it's up to the lessor to decide whether to return the deposit in full or in part, or not at all. Of course, the landlord must take into account the differences between the inventory of fixtures on arrival and on departure, as well as any unpaid bills on vacating the property. It is up to the tenant to contest the landlord's deductions if he considers them unfounded. This being the case, the landlord may not have a security deposit sufficient to repair any damage.

Proceedings against the guarantor

On the other hand, a rental deposit requires the landlord to take action in order to obtain compensation. The landlord has no choice but to take legal action after receiving formal notice from either the tenant or the guarantor, or both. The procedure for taking legal action against the rental deposit is admittedly longer than that for the security deposit, but the landlord has a much better chance of being reimbursed if the tenant's rental debt proves to be substantial.

***

While the difference between a deposit and a security deposit is significant, these two guarantees are not mutually exclusive. Given their different objectives, both are excellent protection against unpaid rent. That said, the rental deposit provides the tenant with undeniable added value. It's clear that presenting yourself to the landlord with a solid guarantor when applying to rent a sought-after property generally proves decisive in the selection process. This is all the more true when you fall into the category of "at-risk" tenants, i.e. those with low incomes or unstable professional situations, which can worry some landlords.