An independent RES exam study resource — not a Government website and not affiliated with the Council for Estate Agencies (CEA).Find My OrderHow to identify official CEA sources
Browse Papers
Home / Free RES questions / Tenancy practice and money terms
← All tenancy practice and money terms questions

A security deposit remains the tenant's money, held by the landlord as security

A worked RES examination question on tenancy practice and money terms, from our Paper 1 bank — with the rule it turns on, and why each of the four options is right or wrong.

Paper 1Lesson 7Tenancy practice and money termsFree — no sign-up

The question

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?

  1. A. The deposit is forfeited to the landlord the moment the tenant falls into any arrears of rent.
  2. B. The deposit belongs to the landlord once paid, and he may apply it against rent as he chooses.
  3. C. The deposit must by law equal one month's rent and is automatically set off against arrears.
  4. D. The deposit is the tenant's money, held as security, and not applied to rent without agreement.

The answer, and why

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.

Want a full paper instead of one question?

The free half-paper is 20 questions with a Section B case study, explained to this same depth. The paid sets are ten full 80-question papers across Paper 1 and Paper 2, every figure checked against the current IRAS, CEA, HDB, URA and SLA position.

Free 20-question paperThe papers in PDF

Looking for past-year papers? CEA doesn't publish them — here's what it does publish.

Independent study material. Not affiliated with or endorsed by the Council for Estate Agencies. No pass guarantee — for study use only.