Security deposit

A security deposit is a monetary advance placed by a tenant upon commencement of a commercial lease. It serves as financial safeguard for the landlord against damages to the premises, unpaid rental arrears, or breach of lease covenants.

The amount is typically negotiated between parties and often equates to two to three months' rent. Upon lease termination, the deposit is returned to the tenant, less any deductions for property repairs or outstanding financial claims. In dispute resolution, the security deposit typically forms the first recourse for the landlord's recovery.