AA - 2019

Author:  Justin Hamers – STBB
4 June 2019

THE TENANT’S DEPOSIT
WHILE PAYMENT OF A DEPOSIT IS NOT A VALIDITY REQUIREMENT, CERTAIN RULES APPLY IF A DEPOSIT IS AGREED UPON IN A LEASE

In lease agreements relating to residential property, the landlord is obliged by the Rental Housing Act to place the amount received as a lease deposit in an interest-bearing account held with a financial institution. The interest rate applicable to this account may not be less than the rate applicable to a savings account at a financial institution. The tenant may request a statement of the interest earned on the money at any time during the tenancy.

If the deposit is paid to the account of a registered estate agent on behalf of the landlord, it must similarly be invested; the deposit and any interest thereon is then dealt with in accordance with the provisions of the Estate Agency Affairs Act.

Code of Conduct for Estate Agents:
9 – Trust Money and Interest

An Estate Agent –
o  Cannot influence anyone to pay trust monies to him/her directly
o  Must disclose to parties to the contract, before he/she receives monies into trust that unless otherwise agreed in writing, the interest on trust monies will be paid:   50% to the EAAB and the estate agency may retain the other 50%
o  Must invest trust monies into an interest bearing trust account
o  Pay the interest to whom it is due
o  May not include a clause in a contract that monies paid by the purchaser will be paid to the seller prior to registration of transfer

unless –
✓ Good cause exists
✓ The party responsible for the payment of the commission has expressly consented
✓ The document explains the implications and financial risk for such party
✓ The document is signed by such party and the estate agent in question