Examining Rental Security Deposit

Many persons are familiar with the common practice of landlords charging one or two months’ rent as a security deposit before the tenant is given possession but is this practice legal?

This topic of security deposit has been a controversial one for many years. The Rent Restriction Act (“RRA”) which was last amended in 1983 governs controlled premises in Jamaica. Section 24(1) of the RRA stipulates that “a person shall not, as a condition of the grant, renewal or continuance of a tenancy of any controlled premises… require the payment of any fine, premium or other like sum or the giving of consideration in addition to the rent…”

In a May 2018 article by the Jamaica Information Service (JIS), it was highlighted by The Rent Services Unit in the Ministry of Housing, Transport, Water and Works, that several amendments are being proposed to the Rent Restriction Act which includes standardisation of security deposits. The provisions will include “standardisation of the number of months of deposits that renters are entitled to charge”. Currently, it is being recommended that one month’s security deposit be standardized for unfurnished premises and two months for furnished. Additionally, the provisions have guidelines for the use of security deposit and refund to tenants.

The cases of Albert Simpson v Island Resources Limited Claim No. 2005 HCV 0102 and Mayne v Rotherham and Another [2016] JMSC Civ. 77, both spoke to the issue of security deposit.  In the first case, the tenant submitted that the security deposit was in breach of section 24 of the Rent Restriction Act and so ought to be refunded. The Supreme Court ruled that the charging of a security deposit or a premium in respect of the said premises was in contravention of the Act.

In the second case, the learned judge ruled that the security deposit in that case did not resemble a fine, premium or consideration in addition to rent; but she made it clear that the “determination of the legality of a security deposit must depend upon the construction of the particular provision in issue and the purpose associated with collecting the sum” Upon the surrender of the leased premises at the end of the tenancy, a tenant is entitled to the return of his security deposit less any expenses which the tenant was obliged to pay during the currency of the tenancy and any damage to the property for which he is responsible.

The court will assess the terms of the lease agreement to see whether the payment constitutes a premium, fine or consideration in addition to rent. If, for example, the tenancy agreement provided for the payment of a returnable deposit, it cannot be considered a premium. It also cannot be considered a premium if the agreement provides that the deposit is to safeguard against the tenant’s non-performance of his obligation to pay for various outgoings or repairs that are reasonably to be borne by him.

A court is likely to find that the landlord holds that sum on trust for the tenant for the duration of the lease agreement and is therefore obliged to return the sum to the tenant on the termination of the agreement after settling of any arrears due from the tenant. It should be noted that you should ensure that there is a signed lease agreement as this will be the guiding document when determining if the tenancy agreement is in breach of section 24(1) of the RRA.

About Author:

Abi-Gaye White-Thomas B.A., LL.B (Hons)
Manchester, Jamaica

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