Deposit And Bond: What Are The Differences?

 

The security deposit is often mistaken for the surety for abuse of language, in the context of a lease that is a furnished rental lease or an unfurnished rental lease.

The security deposit is a sum collected by the lessor used to cover the possible expenses of the rental repairs after the departure of the tenant while the deposit is supported by a guarantor who expressly undertakes to fulfill the obligations of the tenant if the latter is in the impossibility of paying the rent.

Let’s see all the differences between a security deposit and a home lease bail or for any other type of lease.

The deposit is a check cashed by the lessor at the signing of the lease

 The deposit is a check cashed by the lessor at the signing of the lease

The deposit is a check cashed by the lessor at the signing of the lease unlike the deposit check that can be cashed in only specific cases.

Whether the accommodation is empty or furnished, the owner has the right to claim a deposit, often paid in the form of a check, used to cover any rental repairs that must be made after the inventory of places of exit . It is used to guarantee the lessor against any deterioration of the housing, rent or unpaid charges as well as against any work necessary for the rehabilitation of housing.

The deposit is not mandatory, but is becoming more and more frequent. If a deposit is required by the lessor, the latter must expressly mention this on the lease.

However, the amount of the deposit, the terms of payment and its return are heavily regulated by law, especially since the Alur law of March 2014.

The security deposit rules

The security deposit rules

Previously, the amount of the deposit was subject to the will of the lessor. In order to avoid abuses, the law Alur came to legally frame the deposit.

For leases of furnished housing signed as of March 27, 2014, the amount of the deposit can not exceed two months rent excluding charges. In the case of an empty dwelling, this sum can not be greater than one month’s rent excluding charges.
Attention, if the rent is paid for a period other than monthly (quarterly for example), the lessor can not require the payment of a deposit.

People in financial difficulty who can not assume the payment of a deposit can receive assistance such as the Loca-Pass advance offered by Action Logement Services or the Housing Solidarity Fund (FSL). The security deposit must be paid on the date the lease is signed. If paid in cash, the tenant has the right to demand a receipt.

Once the inventory of the place of exit carried out, if it is in conformity with the inventory of places of entry, the owner has a month to return the deposit to the tenant. If rental repairs are necessary, the return period is extended to two months and the lessor may charge these expenses on the deposit paid to the departure. The period begins to run upon return of the keys to the lessor, either in person or by LRAR.

Attention: if the landlord considers that rental repairs are necessary, he must justify any withholding on the deposit with the tenant. If the housing is in co-ownership, the lessor can keep a maximum of 20% of the deposit until the annual closing of the building accounts.

Note: the deposit may also be used in other types of contract, such as the holdback in private works contracts.

What remedies in case of late return of the deposit? 

In the event of delay of return of the deposit, the tenant can put in residence the owner by registered letter with acknowledgment of receipt. If, after formal notice, the landlord still refuses to reimburse the amount of the security deposit, the tenant can refer to the departmental conciliation commission on which the housing depends or inquire with a conciliator of justice. In the event of failure of the amicable recourse, the tenant will always be able to seize the Court of Instance of the place of the domicile of the owner.

In addition, late penalties are provided if the lessor delays repaying the security deposit: the latter is indeed increased by 10% of the monthly rent excluding charges per month of delay.

The surety is a person who vouches for the tenant

 The surety is a person who vouches for the tenant

Unlike the deposit, the deposit is not a sum to be paid but a person who guarantees for the tenant in case of unpaid rent. When signing the lease, the latter must copy and sign a handwritten bond issued by the lessor stating that it will be jointly liable in the event of default by the tenant. It can be claimed when signing a residential lease or commercial lease.

Mandatory information and supporting documents of the act of suretyship

 Mandatory information and supporting documents of the act of suretyship

To be valid, the bond must include:

  • the name of the tenant;
  • the address of the dwelling;
  • the name of the lessor.

Certain mentions, to be copied by the guarantor in a handwritten way, are also compulsory such as the amount of the rent, the duration of commitment of the surety, the ceiling of guarantee as well as the partial reproduction of the article 22-1 of the law of 6 July 1989. This information must be unequivocal so that the guarantor is fully aware of the extent of his commitment.

To ensure the creditworthiness of the guarantor, the lessor may require supporting documents. However, a decree of the Alur Act established an exhaustive list of supporting documents that the lessor was entitled to claim or not.

Undertaking by the guarantor in the context of a surety

 Undertaking by the guarantor in the context of a surety

If the bond does not provide for a term to the surety, the guarantor can terminate unilaterally, preferably by registered letter with acknowledgment of receipt.

In case of roommates, the guarantor can either commit to one of the roommates, or commit to all roommates. In this case, his appointment will end when all the roommates have left the house.
If the guarantor is the guarantor for only one of the roommates, the commitment ends immediately after the termination of the tenant’s notice provided that he is replaced upon his departure.
Attention, the guarantor will be engaged six months after the end of the notice if the tenant has not been replaced.

In addition, as a lessor, you can not claim a guarantor if you have already required insurance against the risk of unpaid rent (Unpaid Rent Guarantee or GIL) unless the tenants are students or apprentices. In this case, the precariousness of their situation makes it possible to justify a combination of guarantees for the lessor.

Single deposit and joint guarantee

 

There are two types of bonds: the single bond and the joint surety.

If it is a simple deposit, in case of unpaid rent, the lessor must first turn against the tenant by sending a command to pay by registered letter with acknowledgment of receipt. Only if the procedure fails will the lessor be able to turn against the deposit to demand the payment of the rent due.

On the other hand, in the case of a joint and several guarantee, the lessor may, from the first unpaid rent, require the surety to compensate for the tenant’s failures.