The Law on Urban Leases (LAU) does not establish a specific time limit for returning the deposit at the end of a lease and only states that, if the corresponding amount is not returned after one month has elapsed since the lease contract was signed, interest will start to be applied.

One of the main conflicts in the rental contract for a property is the payment and return of the deposit.

In these cases, doubts arise: What is the deposit? How much has to be paid? When and how is it to be returned?

Deposit

The deposit is a guarantee in favour of the owner, whereby the tenant/lessee has to deposit a certain amount in cash at the moment of formalising the rental contract. It is obligatory; in other words, it is not possible to sign a rental contract without providing the deposit, otherwise the legal relationship would not be valid (according to article 36 of the LAU).

What amount does the LAU require to be paid as a deposit for the rental?

When signing the contract, it is obligatory to demand and provide a cash deposit equivalent to one month's rent in the case of dwellings and two months' rent in the case of rentals for uses other than dwellings (such as commercial premises).

This amount must be paid by the owner to the corresponding autonomous community. If he does not do so, he is subject to penalties regulated by each autonomous community.

The parties may agree on any type of guarantee in addition to the cash deposit to ensure the fulfilment of the tenant's obligations.

For the rental of housing, in contracts of up to five years (or up to seven years if the owner is a legal entity), the value of this additional guarantee may not exceed two monthly rental payments.

It is not necessary to provide a guarantee for the General State Administration, autonomous and local administrations, public entities and other bodies linked to them.

Updating of the deposit

During the first five years (or seven if the owner is a legal entity), the deposit is not updated. In each extension of the contract, the owner can demand an increase or the tenant can demand a decrease in the security deposit, until it is equal to one or two monthly rental payments, as appropriate.

The updating of the security deposit in contracts that exceed five or seven years is governed by the agreements between the parties. In the absence of a specific agreement, the agreements on the updating of the rent are presumed to be accepted also for the updating of the security deposit.

Term for the return of the deposit

Although the LAU does not establish a time limit for the return of the deposit in the rental agreement, it is understood that the owner has one month from the date of delivery of the keys.

Specifically, article 36.4 of the LAU establishes that the balance of the deposit in cash that has to be returned to the tenant at the end of the contract, will generate legal interest one month after the release of the clauses, if it has not been returned.

Is it obligatory for the owner to return the deposit in the month following the return of the property?

The majority of courts consider that the landlord has one month to return the deposit and that, consequently, the tenant cannot claim the return before this time. A more minority sector considers that the deposit must be returned at the end of the contract and that, one month later, the landlord is in arrears. This gives you a month to make the necessary checks.

Remember that you have a maximum of one month to check the state of the property, the payments and claim damages to recover the deposit. Indicate this in the document of the release of keys to avoid early claims from the tenant.