Question 1
At the start of a tenancy the tenant pays the landlord a security deposit. Later, when the tenant falls a month behind on rent, the landlord announces that he will simply keep an equivalent part of the deposit to cover it, treating the deposit as his own money to apply as he sees fit. There is no clause in the agreement permitting him to do so, and the tenant insists the deposit was always meant to be returned to him at the end and is not the landlord's to spend on the arrears.
Which statement is correct?
Show the answer and full explanation
Answer: D
The rule. A security deposit remains the tenant's money, held by the landlord as security. The landlord cannot simply apply it against outstanding rent unless the parties have agreed he may; it is refundable, and no law requires a deposit at all.
Why D is correct. The deposit is the tenant's money held as security. Without an agreed clause allowing it, the landlord cannot keep part of it to cover the arrears.
The other options.
- B treats the deposit as the landlord's. It remains the tenant's.
- C fixes it by law at one month and sets it off automatically. No law requires or sizes it.
- A forfeits it on any arrears. It is not forfeited; it is security, applied only as agreed.
Exam note. The deposit is the tenant's money, not a rent reserve. Offsetting it against rent needs agreement.
A security deposit remains the tenant's money, held by the landlord as security →