Rent deposit problem.

[QUINN]

The deposit has to be held in an interest bearing account.
If the terms of the contract does not state this, the the interest has to be paid to the Estate Agents Affairs Board.
The landlord being a government department does not change the rules.

[Dave A]

Just to clarify (pardon me being a bit dense here, please).

The deposit has to be held in an interest bearing account.

OK. This makes perfect sense. No problems so far.

But who may get the benefit of the interest? I've seen contracts where:

• The interest accrues to the tenant, and are supposed to get it when they move on along with the deposit refund.
• The administering agent gets the interest as part of their administration fee.
• The landlord gets the interest.

Also, what (if any) legislation determines this?

That bit about the Estate Agents Affairs Board getting the interest is ... erm... interesting. I've never seen that one in a lease/rental agreement.

[QUINN]

Hi Dave hope you had a restful holiday,

The arrangement where the board gets the interest just comes into effect when no arrangement is made as to what should happen with it.

Normally the deposit is held in TRUST for the tenant, I have never seen any arrangements where the landlord keeps the interest........specially in commercial leases I can not understand why any tenant would agree to pay the deposit to the landlord

[Sieg]

I disagree with the two views previously expressed:

1. The Rental Housing Act 50 of 1999 only obliges landlords of a "dwelling" as defined in the Act, to pay interest on a deposit to the tenant upon termination of the lease (Section 5(3)(d). There is no similar obligation in respect of a lease for commercial or industrial premises so the landlord in this case (commercial lease) does not have to pay any interest on the deposit if the lease agreement does not say so;

2. It is only in the case of money held in trust by an Estate Agent (in terms of the Estate Agency Affairs Act) that the estate agency is obliged to pay one half of the interest earned on the estate agency's trust account, to the Estate Agency Affairs Board. The parastatal landlord in this case, has no such statutory obligation.

Sieg