A
rent deposit is principally a sum of money which is held in an account, for an
agreed period of time, to act as financial security in case of default by a party
to a contract.
The money will not earn interest. When
new leases are entered into, a proprietor will often require a rent deposit from
the in-going tenant.
The terms of such a rent deposit
will vary depending on the financial status of the tenant, but can involve the
tenant paying up to 6 months rent in advance.
This amount
is then held by the proprietor for the duration of the lease, or until the financial
integrity of the tenant becomes established.
