Who gets the tenancy deposit back when someone else paid it?
Updated: 20 hours ago
Return of a tenancy deposit often can be fertile ground for disputes.
The parties’ rights and obligations concerning a tenancy deposit will depend on a number of factors such as the tenancy type, how the deposit is held and what the tenancy agreement says.
The most common disputes relate to the timing of return and/or deductions from the deposit, but there can be others.
One interesting example is what happens where the deposit was originally paid by a 3rd party who is not a tenant under the tenancy agreement, such as a family member, friend or employer.
Should it be returned to the tenant or the 3rd party payor? Meaningful arguments can potentially be made in favour of either.
Since the primary purpose of a tenancy deposit is to secure tenant’s obligations (including payment of rent), the default position is generally that the deposit should be returned to the tenant, unless the tenancy agreement expressly provides otherwise (or the parties subsequently agree otherwise).
That is particularly so where the deposit is held on a stakeholder basis, as there is usually very limited scope for the stakeholder to unilaterally depart from their fiduciary-like duties to both parties.
Via Legalis regularly advises on matters relating rights and obligations under tenancy agreements, including tenancy deposits.
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