The rental deposit: how much it is and where it's lodged

The deposit is that money the tenant hands over on signing, the one everyone mentions but hardly anyone understands properly: how much exactly? Where does that money go? When is it returned? If you're a landlord, this concerns you doubly: the deposit carries legal obligations for you.

Please note: general, educational information, not legal advice. When in doubt, consult a professional.

How much the deposit is

The law requires a cash deposit in urban tenancies, and sets its minimum amount according to use:

• Residential (permanent home): the equivalent of one month's rent.
• Use other than residential (commercial premises, offices): the equivalent of two months' rent.

It's a legal minimum, not an absolute maximum: the parties can agree additional guarantees (a bank guarantee, for example), but the one month's cash fianza (rental deposit) is compulsory for homes and you can't demand less... nor should you take it "under the table": everything must be reflected in the contract with its proof of payment.

Watch out for a common confusion: the deposit is not a month's rent in advance nor a payment towards the last month. It's a guarantee that covers potential arrears or damage, and its purpose is to be returned.

Where it's lodged (and why not in your drawer)

Here's the part most landlords don't know: in most autonomous communities, the landlord is obliged to lodge the deposit with the public body each region has designated for this. It's not optional or decorative paperwork: it's a legal obligation of the landlord, with deadlines and possible surcharges if you don't comply.

In practice it works like this:

1. The tenant hands you the deposit when the contract is signed.
2. You lodge it with the corresponding regional body (in the Comunitat Valenciana, the Generalitat's deposit register), normally within a short period of signing.
3. The body holds it until the contract ends.

Each region has its own procedure (in person or online) and its own deadlines, so find out about yours before signing your first tenancy. Your accountant or your agency does this routinely.

When and how it's returned

When the contract ends, the deposit must be returned to the tenant once the state of the home has been checked and pending accounts settled (bills, possible damage). The law provides for the return within a short period — around a month from the handover of the keys — and for it to accrue interest in the tenant's favour if that period passes without it being returned.

The sensible procedure for the landlord:

1. Do the check-out visit with the tenant and compare with the inventory and the check-in photos.
2. Settle what's outstanding: final utilities, minor repairs attributable to the tenant, cleaning if agreed.
3. Return the remainder with a signed document from both parties stating the amount returned and, where applicable, the deductions made and their reasons.
4. Request the return of the lodged deposit from the regional body where you paid it in.

Golden rule: the deposit is not income. If you treat it as your money from day one, the return will turn into a dispute. Keep it, lodge it and return it with paperwork.

What you can deduct (and what you can't)

You can deduct from the deposit amounts corresponding to the tenant's unfulfilled obligations: unpaid rent, damage beyond normal wear and tear, utility bills in their name they've left unpaid.

What you can't do is keep the deposit "just in case", use it for improvements you fancy, or deduct normal wear from living in a home (a wall that needs repainting after years of use is not damage). If the tenant disagrees with a deduction, they'll need to see it justified: keep invoices and photos of everything you deduct.

Deposit and additional guarantees

On top of the legal deposit, it's common to ask for complementary guarantees, especially when the rent is high or the tenant's profile raises reasonable doubts: a bank guarantee (aval bancario), rent-default insurance or additional months of guarantee agreed in writing. Everything you agree must appear in the contract with total clarity: the concept, the amount and the return conditions.

But don't turn guarantees into an impossible barrier. Asking six months up front from a solvent tenant doesn't protect you more; it just leaves you without a tenant.

Renting out in Cullera or La Safor? At Llevant Patrimonial we manage the contract, the deposit lodgement and the final settlement so you don't have to fight the paperwork. Opening soon. And if you don't yet know which contract type suits you, start with the rental contract types.