On payment of security deposit to landlords | The Daily Star
12:00 AM, November 19, 2019 / LAST MODIFIED: 12:42 AM, November 19, 2019

Your Advocate

On payment of security deposit to landlords

This week Your Advocate is Barrister Omar Khan Joy, Advocate, Supreme Court of Bangladesh. He is the head of the chambers of a renowned law firm, namely, ‘Legal Counsel’, which has expertise mainly in commercial law, corporate law, family law, employment and labor law, land law, banking law, constitutional law, criminal law, IPR and in conducting litigations before courts of different hierarchies. Our civil and criminal law experts from reputed law chambers will provide the legal summary advice.

Query

We have rented an office for a term of four years in Banani with a monthly rent of BDT 1,45,000 (One lakh and Forty-Five Thousand) only. Now, after the termination of the lease agreement, we are about to shift in our office. When we asked our landlord to refund the security deposit of an amount BDT 10,00,000 (Ten Lakh) only, he denied to refund it and informed us that, he will need that amount to renovate and do some fixtures on the space as we have used that space for a period of 4 years, thus he held us liable to fix those. It is to be mentioned that in the lease agreement, it was nowhere mentioned that we would have to bear any costs for renovation or fixtures. In this scenario what we should do, please let us know.

Aysha Amin

Dhaka

Response

Dear Ms. Aysha,

Thanks for your query. This is unfortunately a very common scenario in our country, specially in the metropolitan cities where tenants have to go through such turmoil caused by the landlords.

Under section 10 of the Premises Rent Control Act 1991 it is stated that ‘the lessor cannot receive any payment or amount in the form of security, in addition to the monthly rent or claim or receive any amount exceeding one month’s rent as rent in advance without the prior permission of the Rent Controller.’

Thus, it appears from the given fact that the landlord has taken BDT 10,00,000 (Ten Lakh) only as a security deposit which he was not allowed to take at the first place in accordance with the existing law. Further, section 10 of this Act states that no person shall in consideration of the grant, renewal or continuance of a tenancy of any premises -

a. Claim, receive or ask for payment of any premium, salami, security or any other like sum in addition to the rent; or

b. Except with the previous permission of the Controller, claim or receive the payment of any sum exceeding one month’s rent of such premises as rent in advance.

It is evident from the Act that such deposit in form of security is not permissible, and if one has to take any deposit or any sum as rent in advance in excess of one month’s rent shall require a written consent from the Rent Controller. If one fails to do so, in that case he/she will be fined which may extend to double the amount received in excess of one month’s rent and in every subsequent occasion to a fine which may extend to three times the amount received in excess of one month rent as stated under section 23 of the Act.

Furthermore, the same section also states that if the landlord receives any amount as security deposit, he will be fined up to BDT 2000 (Two Thousand) only on the first occasion and on every subsequent occasion to a fine which may extend to BDT 5000 (Five Thousand). Thus, the landlord will be held liable for receiving such amount as security.

Although in section 11 of the Act, it states that the landlord can receive an amount, which is more than the rent of one month, if it is a case of a long lease, not less than 20 years. But in your situation, it is a lease agreement for supposedly 4 years, as appears from the facts given by you. Further since in the lease agreement there was no clause as to whether the landlord can use the security deposit for the purpose of the fixtures or renovation of the premises hence the landlord is least likely to use such amount of BDT 10,00,000 (Ten Lakh) only for any fixtures.

In general it is advisable for you that, if there is any major damage or any damage that might have been caused particularly for your poor maintenance of the premises or negligence, in such circumstance it is better you and your landlord come to a consensus, where you can take the responsibility for fixing the damages caused by you or by inspecting the work done by the landlord to keep an account of the cost that is required for the repair work, and then you can settle the cost with the deposit money. But here there should be a limit to how much cost you should bear as to the damages made by you over the period of 4 years. In a situation, the discussion fails, you can send a legal notice to the landlord and finally may resort to court.

All tenants and landlords shall draw up their agreements in a precise manner by keeping the handing over clauses very clear. Moreover, a joint inspection shall be carried out by both the parties during the handover so that the damages, if any, can be mutually identified and agreed at the time of the handover of the premises. This may avoid unnecessary dispute over recovery of security deposits.

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