In many cases, rental contracts are signed without a full understanding of the clauses included in them, the rights and obligations of the parties involved, or the legal figures involved, such as the rental mandatory deposit “fianza” and the security deposit “depósito”.
This lack of knowledge often leads to questions and confusion, resulting in legal abuse, conflicts and a lack of mediation or negotiation, sometimes leading to recourse to the courts.
Characteristics of the Security Deposit in a Rental Agreement
Definition: The security deposit is a sum of money that the tenant pays to the landlord at the beginning of the rental agreement as a guarantee to cover potential damages to the property or non-compliance with the obligations of the contract.
Amount: The law establishes that the security deposit must be equivalent to one month’s rent for residential leases (Article 36 of the Urban Leasing Law). In the case of commercial leases, the deposit can be higher, although it typically should not exceed two months’ rent.
Return: At the end of the contract, the security deposit must be returned to the tenant, provided that the conditions of the contract are met and there are no damages to the property. The landlord may retain part of the deposit if there are outstanding debts (such as unpaid rent) or damages that need to be repaired.
Characteristics of the Deposit
Definition: The deposit is a sum of money provided as a guarantee for compliance with contractual obligations. While it is sometimes used as a synonym for the security deposit, in many contexts it refers to additional amounts paid by the tenant to ensure compliance with the contract.
Amount: There is no specific legal limit for the deposit, and its amount can vary according to what is agreed upon by the parties in the contract. It may be an additional amount beyond the security deposit, although in practice, the terms are often used interchangeably.
Return: Similar to the security deposit, the deposit must be returned at the end of the contract, as long as the agreed conditions are met. If there are breaches, the landlord may retain part or all of the deposit.
In summary, the security deposit is a legally regulated concept with a specific limit, referring to one month’s rent for residential properties, while the deposit is a broader term that can refer to various amounts agreed upon between the landlord and tenant. Both serve as guarantees, but the security deposit has a stricter and clearer legal framework.
Rental mandatory deposit in the rental law
According to article 36 of Ley de Arrendamientos Urbanos 2/1994, “it will be mandatory to request and provide an amount in cash as Fianza.“. The purpose of the mandatory deposit “fianza” is to ensure that the tenant complies with the obligations set out in the contract.
The rental mandatory deposit (fianza) must be paid to the owner or landlord at the time of signing the contract.
The landlord is obliged to deposit it with the corresponding regional authority within 30 days. In the Community of Madrid, this is the Instituto de la Vivienda de Madrid (IVIMA).
How much does a rental mandatory deposit amount to?
The Ley de Arrendamientos Urbanos 29/1994 establishes that the amount to be paid as a mandatory deposit (“fianza”) varies according to the purpose or rental type.
- In the case of permanent housing for a period of between 3 and 5 years (with the possibility of extension), the amount of “fianza” is equal to one month’s rent.
- For other types of rental accommodation, or rental of a commercial or office space, the amount will be two monthly payments.
The law stipulates that the mandatory deposit “fianza” is not subject to increase during the first five years of the contract, or during the first seven years if the landlord is a legal entity.
However, each time the contract is renewed, the landlord can request an increase in the “fianza”, or the tenant can request a reduction.
When does the “fianza” have to be returned?
The legal period for returning the mandatory deposit is one month. From the moment the keys are handed over to the owner, the owner has a maximum of 30 days, or 45 days if IVIMA delays the return.
Although it is not common, it does happen.
If the landlord does not return the deposit within the specified period without a valid reason, interest could be charged.
¿When is the mandatory deposit (fianza) is partially or totally lost?
- Property damage. If the property is not in the condition in which it was handed over at the beginning of the contract, e.g. scratched walls, stained floors, broken glass, etc.
- Failure to pay rent. Initially, the mandatory deposit should not cover non-payment of rent.
However, if there is non-payment of rent and there is no damage to the property or other outstanding debts, or if the tenant leaves before six months have been passed from the signing of the rental contract or before it expires, the rent will be charged against the mandatory deposit “fianza”. - Failure to pay other expenses. This includes costs related to the consumption of electricity, utilities such as gas and water, or taxes passed on to the tenant.
If the landlord does not return the “fianza” without a legitimate or justified reason, the solution is to go to the competent court, file a lawsuit and wait for the judge’s decision.
DFLAT and its philosophy of exploitation deposits.
DFLAT markets through renowned B2C, B2B channels, moving agencies, relocation, travel and own channels and renowned companies. The risk is minimal. Some companies are Repsol, Telephony and El Corte Ingles, Banks, etc. We tend to request as few as possible due to the low incident rate.
If you are an owner, we want to include your property in our list of corporate apartments for companies and we will help you with the rental management in Madrid, to maximize the return of your home.
If you are a tenant, we work with secure landlords, family offices, and industry professionals who value your reputation. We penalize unfair owners, so the likelihood of an incident is minimal. Visit our website.
