What is a Rental Deposit?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 07 February 2020
  • Copyright Protected:
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A rental deposit is a sum of money people provide as part of the terms of a rental, usually of a home or a piece of equipment. The deposit is held by the owner until the rental is returned and is an assurance that in the event of loss, theft, or damage, the owner will have funds available to compensate. If the rental is returned in good condition, the rental deposit must usually be restored in full. If all or part needs to be withheld, the owner provides an itemized list to provide information about why the money cannot be returned.

The rental agreement should discuss the amount of the rental deposit and provide a timeframe for its return after the rental is complete. In many regions, laws dictate how much money people are allowed to take as a deposit and people must also return the money within a certain time period. Information about the legal restrictions on deposits and how they can be used is usually available from government agencies and people can also look them up in the legal code.


When people prepare to rent anything, they should be told how much the rental deposit is and be given information about the cost of the rental up front. This should include things like late fees for failing to return the rental on time. Optional insurance may be available to pay for repairs or replacements if the renter is concerned about these expenses, as seen with rental cars. If there are any questions or concerns, they should be addressed before signing the rental contract and taking possession of the rental.

At the time of a rental's return, a checklist can be used to go over the condition of the rental and make sure it is being returned in good shape. The law makes allowances for normal wear and tear, depending on how long the term of a rental is. A person returning a car after two days with a big scratch in the bumper would be expected to pay for it, for example, but someone returning a rental house after 10 years with worn carpets would not be held responsible. If any damage or areas of concern are identified, the details can be noted and the renter should review the notes before signing to acknowledge the damage.

For things like rental equipment, the rental deposit is usually returned immediately when the equipment is returned, as soon as a staff member verifies the return and confirms the equipment is working. For houses, people are often given more time to return the deposit, with the understanding that some damage might not be readily apparent, and the landlord may need time to get estimates on repair costs to determine how much money to withhold from the deposit.



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