The Sunday News
Real Estate Issues, with Jonathan Thompson
WHEN you enter into a Lease Agreement, you generally have to make a few payments at the beginning.
Lease Agreement
The first payment will be the rent.
Rent is paid in advance.
The rent for June will be due at the beginning of the month of June, typically on or before the first day of the month.
Every month of the lease agreement rent becomes due in advance of the month.
Other funds that become due each month are rates, water, and other bills, as agreed on by the Lessor and the Lessee.
When you begin a Lease period, you will be required to pay a security deposit.
The security deposit is equal to one month’s rental.
This is money that is held during the term of the Lease.
If the Lessee (the Renter) completes the lease agreement, does not owe any outstanding rentals or bills, and has not damaged the property, then they are entitled to have their security deposit returned.
The purpose of the security deposit is to ensure that the Lessor (the landlord) does not have losses due to problems caused by the tenant.
When you are dealing with a landlord privately, the security deposit should be set aside, and should not be used by the landlord.
With registered estate agents, these security deposits are normally held in a Trust Account.
There are a number of issues that can arise with security deposits. Security deposits can be raised from time to time to match the value of a monthly rental.
If the rent is increased, it is normal to increase the security deposit to match.
For instance, if the rental and the security deposit were set at US$400 initially, but there was an agreed increase to US$450, then it is acceptable to increase the security deposit to US$450 as well.
Many landlords neglect to do this, then at the end of the lease agreement they may find that the security deposit is not sufficient enough to cover losses and damages.
Security deposits should not be used as the last month’s rent.
Often private landlords agree to this, because they have actually spent the deposit, and don’t have the funds to return.
However, they are then not protected if there are outstanding bills or damages to the property.
Security deposits should be returned, unless there are unpaid rentals, unpaid bills, a serious infraction of the lease agreement, or damages to the property.
The damages need to go beyond normal wear and tear. It should be the intention of both parties to fulfil the lease agreement, and to return the security deposit.
Zimbabwe offers an additional challenge when it comes to security deposits.
Often deposits paid years ago, can become worthless, depending on the circumstances.
It is good for both parties to understand what will be happening to the deposit.
Will it be banked?
Can the value be affected?
Security deposits are a tool to create trust in a lease agreement relationship.
As always, it’s good to understand how the real estate issues work and what your rights and obligations are in any real estate transaction.
– Jonathan Thompson is a Registered Real Estate Agent who works in Bulawayo.
He has nine years of experience in Real Estate in the USA, and another 11 years’ experience in Bulawayo.
Thompson Properties (Pvt) Ltd
He is the founder and the Managing Director of Thompson Properties (Pvt) Ltd.
