Security Deposit
Synonyms: Rental Deposit، Damage Deposit، Bond، Lease Deposit
Last updated: 2026-10-05
Short Definition
Amount tenant pays at signing as security for property condition, held by the Ejar platform for leases documented there, 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. For documented leases the deposit is reserved from the tenant’s Ejar wallet and held by Ejar, then refunded or deducted according to the receipt-and-handover form both parties agree (Article 12 of the Real Estate Brokerage Law and Article 20 of its Implementing Regulation). Disputes over the deposit and damage assessment go first, with the consent of both parties, to experts designated by the Real Estate General Authority, and otherwise to the competent court (Article 12, Real Estate Brokerage Law, Royal Decree M/130 dated 30/11/1443H). 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 is reserved from her Ejar wallet when the lease is documented and held by the platform, 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. Both parties approve the unit handover form and Ejar returns the deposit in full (SAR 4,000) to the wallet of Fatima automatically. If there were substantial damage (such as ceramic breakage costing SAR 1,500), the amount would be deducted for the owner as agreed by both parties on the handover form (or by expert resolution or court judgment if they disagree), and only SAR 2,500 refunded 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, protecting the deposit in a government-backed scheme (such as TDS, DPS or mydeposits in England and Wales) is mandatory for most residential tenancies. In the US, regulation differs between states (in California one month since July 2024, with a two-month exception for small landlords, in New York only one month). The Saudi advantage in the deposit is the clarity of its clause in the Ejar-documented contract, holding of the deposit by Ejar as a neutral party with refund or deduction based on the agreed handover form, and referral of disputes to REGA-designated experts or the competent court.
