Managing Security Deposits as a Landlord in France: Best Practices

• What is a security deposit?
• Amount of the security deposit
• Interest on security deposit
• Return of the security deposit
• Deductions
• Late return of security deposit
• Disagreement over the amount withheld
• Lease sale

Rental security deposits are widely used globally, and renting in France is no exception. Landlords and tenants have the flexibility to negotiate terms based on the agreement, with some restrictions. Nevertheless, the lease agreement must clearly specify the amount of this deposit.                                                                                                                                                                                            

What is a security deposit?

In France, the law established on July 6, 1989, determines the security deposit rules to improve landlord-tenant relationships. While not mandatory, it’s rare to find leases without a deposit. It covers any damages caused by the tenant, property maintenance, and unpaid rent.

It is standard practice for a landlord to ask for a rental/damage deposit from a new tenant, which is refundable at the end of the tenancy. The damage deposit is called the dépôt de garantie.

Yet, the deposit is not obligatory, and a landlord cannot insist on one if the rent is payable more than two months in advance.

It is important to note that tenants cannot use the deposit to pay their month’s rent unless the rental contract states otherwise.

Likewise, while there’s no fixed date for payment, it is usually paid upon signing the lease. 

Even when a rental agency manages the property, the landlord often retains the security deposit in France. Unlike in several other countries, deposits do not need to be held in a government-backed system.

The difference between a security deposit and a deposit

The deposit is an amount that the guarantor will pay in case the tenant fails to pay; it is not refundable.

The tenant, not his guarantor, pays the security deposit. The landlord collects this sum at the lease’s signing and returns it to the tenant.

Amount of the security deposit

The deposit amount legally varies depending on whether the property is furnished or unfurnished. It can be up to one month’s rent for unfurnished properties and up to two months’ rent for furnished ones.

Code Civil leases, which include corporate and secondary residential leases, have a maximum rent payment of two months (rental expenses included).

The maximum rent for a primary residence lease is one month for unfurnished properties and two months for furnished flats (not including rental fees).

When renting vacation homes, the security deposit should be no more than 20% of the rental cost (or 25% if a mediator like a real estate agency is involved). Tenants should also pay no more than six months before the rental period.

Sometimes, the landlord may ask for an additional security deposit from the tenant to protect against damage to the rental property. For instance, if the rental flat includes expensive artwork and luxury furnishings, the lease agreement must specify this extra security deposit or insurance.

Interest on security deposit

Also, the landlord cannot increase the security deposit throughout the lease term, regardless of how long the lease is extended.

Return of the Security Deposit

The entry and exit inventory (état-des-lieux) is closely related to the security deposit. When the final walkthrough is perfectly fine, the landlord must refund the security deposit to the tenant 60 days after they move out (“deposit reimbursement duration”) unless the property is damaged.

Deductions

When the tenant’s stay ends, a final inspection compares the apartment’s condition during move-out with how it was when a tenant moved in. This assessment involves both the tenant and either the landlord or their representative.

If the property’s condition at the end matches that at the start, the landlord must refund the total security deposit amount to the tenant. However, deductions may occur in several situations:

• If there are discrepancies in the property condition during moving out,
• In the case of rent arrears,
• any outstanding housing tax,

• If the utility charges the tenant pays are less than the expenses incurred.

In these scenarios, the landlord can withhold some or all of the security deposit with appropriate documentation (quotes for repairs, bills, property inspection reports, receipts or estimates for repairs or replacements, etc.).

Late return of security deposit

In the case of furnished rentals, the landlord typically has one to two months, as mentioned above, to refund the deposit. Suppose the tenant does not receive the security deposit within this timeframe. In that instance, the tenant should send a registered letter to the landlord. They could inform them that they have exceeded the time and request the return of the security deposit, along with a 10% interest for each month of delay.

Should the landlord fail to refund the deposit, the tenant can seek assistance from the Commission de Conciliation in Paris at no cost. This usually leads to a resolution between both parties. If this process does not reach an agreement, the tenant can approach a tribunal with documentation from the Conciliation Committee’s decision.

Disagreement over the amount withheld

If the landlord determines that renovations are necessary, they may choose to keep a portion of your security deposit. A tenant might disagree with a landlord on this, though. Because of this, it’s critical to keep photos and documents related to the entry and exit inventory, the lease, and evidence of payment. This way, no party can serve their own interests.

Arbitration

Involving a third person in mediation can be a helpful strategy if direct discussion cannot result in a resolution. Arbitration can assist in reaching a mutually agreeable resolution between a tenant and a landlord without needing court action.

When a tenant pays the security deposit in cash, they can ask the landlord for a receipt to confirm that the amount paid matches the security deposit amount. However, the landlord cannot ask for a security deposit in an agreement with a mobility lease.

If the tenant gives notice to terminate the tenancy, they are not entitled to use the deposit held by the landlord in place of rental payments. They must pay the rent usually and seek a deposit refund when they vacate the property.

Engaging a property management firm can help avoid disputes. The property manager will know how to handle all the necessary procedures. However, if a dispute does occur we’ve offered guidance on how to resolve tenant-landlord disputes.

Is it preferable to pay a security deposit or pay rent in advance?

It really depends on the situation. Paying a security deposit is more common, while a landlord might request paying rent in advance if a tenant has a poor credit history or no guarantor.

Good to know:

If a tenant pays rent in advance every quarter, the landlord cannot request a security deposit.

If a tenant decides to pay the rental deposit in cash, up to a maximum of 1,000 €, the landlord must provide a receipt as evidence of payment. However, most landlords and agencies prefer that tenants pay security deposits via check or bank transfer.

Lease sale

The landlord can sell a property even if it is currently occupied by a tenant. After the sale, the new owner must return the security deposit to the tenant when the lease expires.

Please note: This article does not constitute legal advice – the information on this page has been prepared solely for your information. As we are not a law firm and act as a platform, we can and may share our estimations, but we cannot give you legal advice for your individual further proceedings.