Security Deposit
Synonyms: Rental Deposit، Damage Deposit، Bond، Lease Deposit
Last updated: 2026-05-07
Short Definition
Amount tenant pays landlord at signing as security for property condition, refunded after deducting damages, typically equal to one month's rent.
Overview
Legal Basis
The Security Deposit in rental contracts is based on the Civil Transactions Law issued by Royal Decree No. (M/191) of 1444 AH, especially the chapter related to rental which specifies the obligations of both parties. It is also subject to Ejar platform regulations requiring the inclusion of the deposit clause in the contract clearly (amount, refund conditions). In dispute cases, the Judicial Committee for Rental Disputes has jurisdiction, relying on the clause in the Ejar-documented contract. The owner does not have the right to use the deposit to cover ordinary rent; it is allocated only for damages and overdue obligations.
Practical Example
Fatima rents an apartment in Al-Worood district in Jeddah for an annual rent of SAR 48,000 (SAR 4,000 monthly). The owner asks her for a deposit of one month = SAR 4,000, which she transfers to the owner via bank, and the amount is explicitly mentioned in the Ejar contract. During the year, Fatima uses the apartment carefully, and upon contract end she hands over the keys. The owner inspects the property, notices a slight scratch on the door from normal use (not held accountable), and finds no other damages. The owner transfers the deposit in full (SAR 4,000) to Fatima account within 5 days. If there were substantial damage (such as ceramic breakage costing SAR 1,500), the owner would deduct the amount with submission of repair invoice, and refund only SAR 2,500 to Fatima.
Common Mistakes
- ✗Paying the deposit in cash without documentation — making it difficult later to prove payment when claiming refund.
- ✗Failing to document property condition upon receipt with photos — causes disputes over damages at term end.
- ✗Assuming the owner will refund the deposit automatically without follow-up — inquiring within a week of vacating is recommended.
- ✗Owner attempting to deduct normal wear and tear from deposit (e.g., ordinary painting) — this is illegal; normal wear is on the owner.
- ✗Agreeing to a deposit higher than 3 months without justification — may be considered excessive and may be rejected in some cases.
International Differences
Deposit controls differ between countries. In the UAE, deposit is common at 5% of annual residential rent, kept with the owner and refunded after handover. In Turkey, Depozito is legally limited to a maximum of 3 months rent and is kept in a joint bank account for safety. In Egypt, deposit is common but less regulated, and in some cases is only one month value. In the UK, the Tenancy Deposit Scheme (TDS) is mandatory; the deposit is held with a neutral third party with government guarantee. In the US, regulation differs between states (in California maximum two months, in New York only one month). The Saudi advantage in the deposit is the clarity of its clause in the Ejar-documented contract, the fast resolution mechanism via the Judicial Committee, and direct enforcement of decisions.