Property owners on the spot for ripping off tenants on ‘caution money’

August 17, 2023

Ange Uwera had been a tenant in a chambrette located in Nyamirambo, Kigali for roughly three months when she made the decision to relocate. She then proceeded to provide her landlady with a notice 14 days before her intended move-out date. The landlady acknowledged the notice and indicated that everything was in order. On the designated moving day, Uwera requested the return of her security deposit, commonly referred to as ‘caution money’, which totalled Rwf 65,000, equivalent to one month’s rent.

 

But her landlady was insistent on splitting it in half. “I declined because there was no damage whatsoever to any of her property,” says Uwera, 25. “So why should I share the caution money with her?”

 

In Uwera’s situation, as explained by two legal experts from Stabit Advocates, the actions taken by her landlady might not have been inherently unlawful, given the absence of any contractual breach on the landlady’s part.

 

Nevertheless, Uwera’s story concluded on a positive note. Following the landlady’s attempt to transfer half of the caution money through mobile money, which Uwera promptly returned, she sought assistance from her lawyer brother.

 

A formal demand letter was drafted, and subsequently, the landlady was confronted and warned of potential legal action unless the security deposit was refunded. This ultimatum appeared to have the desired effect, and Uwera managed to leave with her deposit intact.

 

Herbert Zziwa and Edgar Ankunda, attorneys practicing at Stabit Advocates, verified that in Rwanda, security deposits are not governed by a specific legal statute. Instead, the terms of most, if not all, rental arrangements derive from principles established within contract law.

 

This is why, says Noel Nzanzineza, Deputy Director General at Rwanda Housing Authority, RHA has not been actively monitoring the security deposit situation. He indicated, however, that “if the matter becomes serious, especially given its relevance to housing, we will certainly investigate the issue.”

 

 

A growing concern

Anecdotally, we hear about it all the time. Instances where landlords retain security deposits or impose disproportionately substantial deductions for minor apartment damages, an imbalanced power dynamic that disadvantages tenants.

 

Take 24-year-old Elvis Kwizera. Having leased a one-bedroom residence in Kicukiro (Sonatubes) for a duration of four months, he decided to approach his landlord to reclaim his security deposit. During his tenancy, there was a singular incident involving a broken glass door caused by a friend’s visit. The landlord required Kwizera to cover the repair cost, a request that Kwizera complied with. This ensured that when he was ready to move out, the apartment was in impeccable condition. Naturally, Kwizera anticipated no complications in retrieving his deposit.

 

But when the time came for his departure, his landlord persisted in withholding the refund. The reasons provided – citing other tenants who had returned after vacating – left him perplexed (why assume he’d be returning too?). Kwizera seems inclined to think that the underlying concern for the landlord might stem from his own dissatisfaction with Kwizera’s decision to move out, potentially leaving the property unoccupied. Ultimately, Kwizera let the matter go, given that “the sum involved wasn’t particularly substantial to begin with.”

 

According to Zziwa, retaining legal representation to recover the funds seldom proves cost-effective unless the sum is considerable, typically exceeding Rwf3, 000,000. Conversely, for smaller amounts, filing a complaint with RDB is the recommended course of action.

 

Or consider an alternative approach: if the tenant is still residing in the property, has consistently met rent obligations, and has not caused any damage, it could be a preemptive measure to temporarily withhold payment for the last month’s rent. This action could serve as leverage for the return of the deposit or be seen as a substitute for the deposit itself.

 

“The primary purpose of a security deposit is to serve as a safeguard for the landlord against potential damages to the apartment,” said Zziwa. “It is not intended to function as payment for the final month’s rent.”

 

Still, it’s a common practice for renters to use the security deposit as a means to cover the last month’s rent, his colleague, Ankunda, pointed out. “Many people adopt this approach as a form of self-protection.” Yet, he cautioned that this action technically violates the terms of the lease and might prompt the landlord to initiate legal proceedings. “But since the landlord-tenant relationship is ending, the landlord’s options are limited,” he added.

 

Security deposits contribute to the challenges faced by low-income people when it comes to relocation. In recent years, caution money has witnessed a notable surge, with tenants frequently being required to provide a deposit equivalent to two months’ rent, an amount that may remain inaccessible to them for an extended period, and subject to potential deductions. Adding to the frustration for many renters is the obligatory need to secure a deposit for their new accommodation even before reclaiming the previous one.

 

“Although most security deposits are typically established at a one-month rate, there are instances when landlords demand a two-month deposit, particularly if tenants intend to undertake significant alterations to the rental property,” highlighted Romeo Ngabo, a realtor affiliated with Century Real Estate situated in Kigali.

 

Ngabo notes that occurrences of this nature are infrequent, mainly due to their proactive approach of establishing a shared understanding between landlords and tenants prior to the commencement of the tenancy. This is consistently outlined within a formal tenancy agreement that is mutually signed, and they, as agents, bear witness to this process. “In cases that requires clarification,” he further explains, “we refer back to the executed tenancy agreement and specifically refer to the applicable clause that addresses the particular situation.”

 

Let’s say Uwera is preparing to move to a new apartment soon. What could be done differently this time? In her previous experience, it seemed that Uwera’s landlady had developed the notion that they had cultivated an unusually amicable relationship; she would demand that Uwera disclose details about every visitor. Given this context, it was unsurprising that the landlady expressed dissatisfaction when the moment arrived for Uwera to reclaim her deposit. It appeared as if her stance was rooted in the belief that friends ought to be generous with each other.

 

According to the legal experts at Stabit, a considerable number of tenants within lower-income households tend to forego a documented tenancy agreement. Unfortunately, certain landlords exploit this absence of formal protection. Occasionally, Zziwa says, the situation is influenced by the dynamic between the landlord and tenant. He recounted a scenario wherein a landlord chose to adopt an uncooperative stance and insisted that a tenant acquire a specific mattress brand from the UK. Ultimately, the tenant had no choice but to comply with the landlord’s specified amount, regardless of whether it was deemed reasonable or not.

 

Hence, it is advisable for tenants, irrespective of their income level, to establish a practice of entering into either verbal or written agreements when initiating occupancy in a new residence. It is helpful in cases similar to Uwera and Kwizera, to maintain records of agreements with the landlord, such as the inventory of appliances within the apartment, which can bolster their position.

 

“If it’s not feasible to create such a list, or if the circumstances don’t allow for it, tenants can opt to capture photographs of the vacant apartment prior to moving in, as well as additional pictures when vacating,” suggests Ankunda. “By doing so, the tenant safeguards themselves against the landlord’s potential refusal to refund the deposit based on claims like a damaged refrigerator or cracked windows. The photographic evidence can establish that these conditions existed prior to the tenant’s occupancy.”

 

Notify the landlord in advance about your intention to vacate, and in a written format, request an inspection of the apartment no less than two weeks before your move-out date. It’s imperative that the landlord provides you with a detailed inventory of potential damages that might result in deductions from your deposit, affording you the chance to rectify any issues. “If you place the landlord in a position where it’s difficult to assert that the apartment was in a state of disrepair,” the legal professionals advise, “you are actively minimising the chances of disputes over the apartment’s condition.”


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