Why Home Owners And Occupiers Always Disagree On Security Deposit In Lease Contract Agreement.

Have you ever wondered why home owners and occupiers fight and disagree on rent security deposit? Many people presently or at some point in their early life must have paid a certain amount of money as rent security deposit to their home owners popularly referred to as the landlord.

Most times at the point of signing the lease contract agreement the issue of rent security deposit always crop up which the occupier must pay prior to moving in to his newly rented apartment.

However, when the rent elapsed and the occupier ask for the refund of his security deposit from the home owner or the representative, problem ensue either because the home owner has used or mingled the security deposit with his personal money or he felt the apartment has been badly damaged by the occupier and therefore deserves no refund of the security deposit.

My question is how do you justify the actions of both the home owners and occupiers on issue of rent security deposit? This article gives insight into how security deposit is anticipated to be managed and also helps to dispel all disturbing concerns anyone might have on security deposit particularly in this part of the world where there is no strict laws contraining the actions of both the home owners and occupiers on issue that borders on rent security deposit.

Without wasting much of your time, let me quickly walk you through the essence and purpose of this post to show you the reasons home owners and occupiers fight over rent security deposit which most time is due to lack of understanding of their right and unavailability of laws to protect the interest of both parties.

Rent security deposit is one of the most complex and contentious issue home owners and occupiers must dealt with each time both parties try to establish a lease contract agreement relationship.

Interestingly this is not new to people living in developed countries of the world and it is considered trivial because there are strict laws protecting the interest of all parties involved in a lease contract agreement and also restricting the activities of all parties particularly on issue that borders on security deposit.

Surprisingly the case is not the same in this part of the world because the state Tenancy Law lacks some fundamental provisions that could have ordinarily be the panacea for all issues not only on security deposit but also all problems emanating from rent issues our laws didn’t take care of.

Only God knows why the government has been silent or ignored this vital issue in the state Tenancy Law and both the home owners and occupiers are left in the lurch.

Basically, in rental properties, all leases require occupiers to pay security deposit directly to home owners or through their representatives to take care of damages beyond the normal wear and tear caused during the occupier’s stay in the rented apartment.

In addition, it is also in order for home owners to raise or bring up the security deposit if the rent of the apartment is increased or renewed at a higher rate through an increment or lease renewal notice.

Be that as it may, the occupier is only expected to pay the home owner an additional money that will only raise the security deposit to the newly monthly rent.

Let me delineate in details what this means in reality. The Internationally acceptable practice is that security deposit must not exceed a month’s rent of the total annual tenancy rent amount, to simply put it if an occupier’s annual rent is seven hundred and twenty thousand naira, #720,000 ($1972.60) excluding the leasing fee, agreement and commission then the security deposit to be paid by the occupier on such annual rent must not exceed sixty thousand naira, #60,000 ($164.38). This actually in real sense will be a month’s rent if you divide the total rent amount by twelve months.

The element of surprise in this is that it turns out that the Lagos State Tenancy Law is silent on the limit to how much of rent security deposit and leasing fee can be collected from occupiers. There is no provision in the tenancy law that clearly state what and how exactly home owners should manage or handle the security deposit paid to them by the occupiers.

Over the years, the inability of the government to enact laws and the unavailability of laws to restrict or constraint the activities of both home owners and occupiers in lease contractual agreement especially on the limit to security deposit that can be collected and also how home owner’s property asset can be protected in the event of a major damage to the property by the occupier.

This accounts for misappropriation of occupier’s security deposit and also explains the reason most home owners find it difficult to give account of how they utilize or spent the occupier’s security deposit.

The crux of the issue is that security deposit belongs to and are owned by the occupiers but paid to home owners to be treated as a trust fund belonging to the occupiers which the home owners has no right in anyway whatsoever to mismanaged or use it to meet personal or business needs.

I want to reiterate that security deposit belongs to the occupiers and they deserve to be refunded provided they meet up with the moving-out instructions and requirements in the lease agreement, in other words occupiers must be paid their security deposit in full provided the apartment is not left in a ropy state and if there are no severe damage to the apartment except for normal wears and tears.

To this end, security deposit that is most times refers to as damages in this part of the world is expected to be deposited in an interest bearing account or in an escrow service company by the home owners or their representatives as it is done in civilized countries.

It is also the responsibility of the home owner to inform the occupier in writing stating clearly the amount of the money deposited, the name and address of the bank or escrow company.

I must emphasize that home owners are allowed to take out 1% of the security deposit on a yearly basis to cover for administrative expenses while the occupier is refunded with the left over or balance and interest provided no major damage to the apartment is recorded.

However if there are issues or cases of unpaid rent or substantial damage to the apartment the home owner may use the security deposit as a reimbursement for unpaid rent or the reasonable cost of repairs to be carried out after which the balance of the security deposit must be returned to the occupier not later than thirty days after the termination of the lease agreement.

In reality, the task of occupiers moving out of an apartment in good condition and home owners willing to refund their security deposit is arduous and difficult to determine in this part of the world because of the absence of laws or provisions in the tenancy law to guide and regulate these processes.

The general beliefs are that there is no way an occupier would use or stay in an apartment for a year and not damage the apartment up to the amount of the security deposit paid to the home owner upon moving in.

For this reason occupiers also don’t carry out repairs and maintenance or replace anything faulty equipment in the apartment and also mess up the apartment in a way that the security deposit would never be enough to take care of the repairs or total full rehab necessary to prepare the apartment for another occupier.

If you ask me this explain why many property assets are in a deplorable state due to lack of adequate and periodic maintenance which in turn reduces the asset value over time.

I don’t want to belabour the need for government to provide an enabling environment for home owners and occupiers by promulgating laws that will protect the interest of all parties in lease contract agreement. If there are good laws regulating and contraining the excesses in the activities and conducts of both home owners and occupiers in lease contract agreement then all parties would be obligated to be on the side of the law and act more responsibly and reasonably and also would not averse to the laws binding them in the agreement.

The government should cogitate this initiative and play its role by enacting laws that will address and regulate the limit to how much of security deposit can be collected from occupiers, state how it must be managed by the home owner or the representative and must also espouse the conditions or requirements as provided by the law that must be be met by the occupiers before they can be refunded in full or part of their security deposit.

I want to believe if occupiers know and are sure there are laws protecting their interest that can help get back their security deposit at the end of their lease tenure, I am sure they would want to do everything to secure their security deposit by ensuring that the rented apartment is always in good condition and this will go a long way to reduce the litany or barrage of complaints being lodged every day in mediation centers and the court of law by home owners and occupiers on issues of rent particularly on security deposit.

Let me give an insight to how this can be successfully achieved, there must be a proper and thorough moving-in inspection of the apartment by both the home owner or the representative and the occupier in order for them to agree on the state of condition of the apartment and of course the pre existing conditions must be documented. Occupiers must be wary of home owners or their representatives who may want to chivvy them into signing the lease agreement when not fully satisfied with the condition of the apartment.

Similarly, while planning to move out or vacate the apartment, occupiers are obligated to inform the home owners or their representative of their intention to move out of the apartment in writing not later than thirty days to the expiration of the existing lease.

Also it is the responsibility of the occupier to keep the apartment in great shape, clean, make minor repairs and also remove all personal belongings from the apartment.

Upon relinquishing the keys to the apartment, the home owner or the representative together with the occupier and the inspection team conduct a moving-out inspection by walking through the apartment taking pictures and making report on details of damages to the apartment if there are any.

However if there exist no damages and no damages are recorded the occupier gets his or her security deposit in full but if there are major damages to the apartment then a full report of the damages with descriptions including photograph must be generated for review by the home owner after all the repairs and maintenance cost must have been lawfully estimated to determine the how much is needed or required to put the apartment back to a rentable state.

This process must be verifiable, reasonable and above all must be lawfully executed for any claims to be awarded. A printed copy of the estimated cost of the damaged items in the apartment must be sent to the occupier for acknowledgement.

If the security deposit is much more than the estimated cost of repairs then the lawful deductions are made and the balance of the security deposit is returned to the occupier.

But if the estimated cost of repairs is way higher than the security deposit, then the occupier must augment by paying up whatever remains for the repairs to be completed on time to enable another occupier move in.

Moreover in the event that the building is sold to another owner, the home owner must transfer all security deposit to the new owner within five working days or return it to the occupier. It is also the duty of the home owner to forward the name and address of the new owner to the occupier.

Finally, I strongly advice or suggest that whenever you are faced with issues that border on rent security deposit, you should endeavor to first of all try to resolve the issue with the home owner before taking any action to know the true state of the issue because some representatives are congenital liars. If the dispute can’t be resolved then you can seek a redress in the court of law.


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Ordiez Resources, Where The Future Of The Real Estate Industry Begins, This Is How Tomorrow Moves In Real Estate Investing And Property Management, Serving And Guiding Humanity http://www.ordiezresources.com



Olatunbosun Idowu

For Ordiez Resources Inc.



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