REFUND OF RENTAL DEPOSIT

Many rental disputes are usually related to repairs and security deposits. After the tenancy ends, the landlord often wishes to restore the property to its original state while the tenant wishes to have a (full) refund of his/her deposit.

Kenya has no specific law that regulates the amount a landlord can charge as a rental deposit. Also, no law states that a rental security deposit must be deposited by the tenant. The request and payment of rental security deposits are thus explained through practice, which has been made standard in the property rental market. While the security deposit is often one month’s rent, the landlords have the latitude to request a two- or three-month rent deposit depending on the nature of the lease. For instance, long-term tenancies or commercial tenancies are likely to have higher security deposits. Often the payment of a security deposit is primarily governed by the lease agreement.

The law is that the landlord cannot wrongfully withhold the security deposit when the tenant moves out of the property after the termination of the lease or rental agreement. Besides, charging for normal wear and tear and not providing the tenant with an itemised accounting of what has been deducted along with the specific costs for the services performed is regarded as wrongful withholding of security deposit.

It is good practice that a landlord undertaking any repairs should first inspect the property in the presence of the tenant so that the condition of the rental property is assessed and documented by both parties. Any work done on the property should be itemised. These costs should be sent to the tenant to justify any deductions made to his/her security deposit. Without having such a process, the landlord may have a difficult time justifying why he deducted the security deposit or failed to refund it altogether. Further, once the appropriate deductions are made, the balance of the security deposit should be released to the tenant.

If the inspection is done in the absence of the tenant, the inspection report, inventory, and subsequently any repairs that are related to such an inspection are likely to be disputed by the tenant as being inflated. This can easily lead to a court dispute.

After 21 days, the landlord could be faced with potential legal claims for a claim of the security deposit if no such itemized inventory is provided. It will also be wrongful when the landlord fails to refund the security deposit within a reasonable time. This could expose both the landlord and tenant to legal costs that may often overshadow the recovery of the security deposits. Therefore, the best option would be to have a transparent process that avoids conflict.

Since there are no regulations in Kenya, such as escrow provisions governing rental deposits, parties must resort to the rental agreement and case law in determining their obligations concerning rental agreements. When the agreements have clear provisions, there are likely to be fewer disagreements on how the deposit will be handled after termination.

Before entering into any rental agreement, a tenant should have the rental agreement placed before a real estate professional like a lawyer and receive proper advice. For the landlord, it is important to have clear provisions pertaining to the depositing and refunding of the rental deposits.

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NOTICE: THIS IS NOT LEGAL ADVICE. SEEK LEGAL ADVICE FROM YOUR LAWYERS.