What happens to the deposit in a lease agreement?

7 June, 2018
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Civil
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Neus Vallara


When we subscribe a lease agreement the lessor requires the constitution of a rent deposit, which is foreseen by law as the Law for Urban Rents establishes as mandatory that “when entering into a contract it is mandatory asking for and providing a deposit in cash whose amount is equal to one month’s rent in case of house leasing and two in case of leasing for use other than housing”.

But what happens when the contract ends? What happens to the deposit? The return of the deposit is one of the usual conflicts when the contract expires, given that the parties doesn’t reach an agreement regarding the amount to return. On one hand, the lessee usually asks for a full refund of the deposit at the moment of the key handover. And on the other hand, the lessor is reluctant to paying any amount until verifying that the property is under the same conditions as it was when it was leased. And the point is that both parties are holding their rights.

Specifically, article 36.4 of the Law for Urban Rents states clearly that “The amount of the deposit in cash that has to be returned to the lessee at the end of the lease, will accrue legal interest, one month after the key handover without any effective refund “. This wording is usually interpreted as if “the lessor has a time limit of one month to give back the deposit”. And it doesn’t work that way:

The lessor is bound to return the deposit at the end of the contract, but as the deposits has to be entered in the appropriate body of each Autonomous Community and the devolution has to be managed proving the end of the contract, is almost impossible to do the restitution at that same moment. This procedure usually lasts 3 weeks and the delay is not attributable to the lessor, but to the competent Administration, that’s the reason why the law states that the accrual of interests starts one month after the key handover.

A different issue is the final amount to return according to under which circumstances the property is found after the lease. What does the deposit grant? The deposit grants the obligations foreseen in the contract, which means that if the lessee has caused any damage to the property that is not due to mere use, its repair can be deducted from the deposit, although the lessee has to prove the existence of such damage and the cost of the repair. Something that can’t be done, unless there’s mutual agreement between the parties, is to compensate with the deposit the unpaid rents that remain before the end of the lease, something that usually happens when the lessees suspect they are not getting back the deposit.

Given the fact that the amount of the deposit is equal to one month of the rent and it is not usually very high, most of the lessees withdraw their claim beyond the extrajudicial route, without knowing that it is not necessary the intervention of an attorney and a lawyer to initiate the judicial claim through an order of payment, regardless of their further intervention depending on the evolution of the procedure.

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