Where must a tenants security deposit be kept and what must it be used for in South Africa

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Here's a more detailed and comprehensive explanation of where a tenant's security deposit must be kept and how it must be used in South Africa, according to the Rental Housing Act (No. 50 of 1999) and applicable amendments:

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🔐 1. Where Must a Tenant’s Security Deposit Be Kept?

Under South African law, when a tenant pays a security deposit, the landlord has legal duties regarding how that deposit is handled:

a. Interest-Bearing Account Requirement

• The landlord must place the tenant’s deposit into a bank account that earns interest.
• The deposit must be held separately from the landlord’s personal or operational funds.
• The interest earned must be at least equal to the rate a standard savings account would earn at that institution.

Purpose: This ensures the deposit grows slightly over time and is protected from misuse.

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b. Disclosure to the Tenant

• The landlord is legally required to disclose the following to the tenant in writing:
  • The name of the bank where the deposit is kept.
  • The type of account (i.e., interest-bearing).
  • The interest rate that will apply to the deposit.

Tenant's Right: The tenant can request written proof of how the deposit is held and what interest it has earned, and the landlord must provide this on request.

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c. When Managed by an Estate Agent

• If the landlord uses a registered estate agent or property manager, the deposit must be paid into a trust account governed by the Estate Agency Affairs Act.
• The interest still accrues to the tenant, and the agent must account for the deposit separately.

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💰 2. What Can the Security Deposit Be Used For?

The security deposit is not income for the landlord. It serves as financial protection in case the tenant:

• Damages the property,
• Fails to pay rent,
• Leaves unpaid utilities or other charges,
• Or vacates the property in an unacceptable condition.

Permitted Uses:

1. Repairing Tenant-Caused Damage

   • Only damage beyond normal wear and tear can be deducted.
   • Examples:
     • Allowed: Broken tiles, holes in walls, stained carpets.
     • Not allowed: Minor scuff marks on walls, faded paint.

2. Outstanding Rent

   • Any unpaid rent at the time the lease ends can be recovered from the deposit.

3. Unpaid Utilities or Service Charges

   • If the tenant has not paid for water, electricity, refuse removal, or other agreed charges, the landlord may deduct those amounts.

4. Cleaning and Restoration Costs

   • If the tenant leaves the property excessively dirty or damaged, the landlord may deduct for professional cleaning or necessary restoration.

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📝 3. End-of-Lease Requirements

South African law also lays out a strict process for returning the deposit and handling disputes:

a. Joint Exit Inspection

• The landlord and tenant must conduct a joint inspection of the premises on the day the lease ends, or within 3 days before.
• Purpose: To assess whether the tenant has caused any damage.
• If damage is found, the landlord can deduct the cost of repairs from the deposit.

Important: If the landlord fails to arrange the exit inspection, they lose the right to claim damages from the deposit (but may still claim for rent or utility arrears).

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b. Timeframe for Returning the Deposit

Situation	Return Deadline	Requirements
No damage or deductions	Within 7 days	Full deposit + interest
With deductions	Within 14 days	Written list of deductions + receipts or quotes
If tenant doesn't attend inspection	Within 21 days	Landlord may inspect alone, but must notify tenant

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c. Receipts and Proof

• The landlord must provide the tenant with receipts or written proof for any deductions (e.g., repair invoices, cleaning quotes).
• The tenant can challenge unfair deductions through the Rental Housing Tribunal.

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⚖️ Legal Remedies for Tenants

If the landlord:

• Fails to pay back the deposit in the required time,
• Deducts money without valid reason or proof,
• Or fails to follow inspection procedures,

The tenant may file a complaint with the Rental Housing Tribunal, a free dispute resolution body that handles landlord-tenant issues.

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✅ Summary Checklist for Landlords and Tenants

Responsibility	Landlord	Tenant
Deposit held in interest-bearing account	✅ Required by law	🔎 Can request proof
Written disclosure of account info	✅ Required	💬 Ask for bank and interest info
Exit inspection conducted	✅ Must arrange with tenant	✅ Must be present if possible
Damages recorded and documented	✅ With photos, receipts	📷 Take your own photos too
Return of deposit	✅ Within 7–14 days depending on damage	🕒 Follow up if delayed
Dispute resolution	❌ Avoid if rules followed	⚖️ Rental Housing Tribunal is available

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