Rental deposit: Complete rules for landlords and tenants

The security deposit is one of the most common sources of disputes between landlords and tenants. Landlords want it as much as possible as protection against damage and debt, tenants fear they won't get it back. This guide will explain everything you need to know about the deposit under Czech law, how to deal with it correctly and how to avoid conflicts.

What is a deposit (surety) and what is it for

Legal definition

A deposit, referred to in legal language as a surety, is a financial sum that the tenant pays the lessor at the beginning of the lease as a guarantee of the fulfillment of the obligations arising from the lease. You can find the amendment in § 2254 of the Civil Code (Act No. 89/2012 Coll.).

Purpose of the security deposit

The security deposit serves as insurance for the landlord against:

• Unpaid rent or advance payments for services
• Damage to real estate caused by the tenant
• Arrears from billing services
• Costs for restoring the apartment to its original state after the end of the lease

Mandatory or voluntary?

The deposit is not required by law. It is a contractual arrangement that must be enshrined in the tenancy agreement. If the contract does not mention a deposit, the lessor is not entitled to it.

Statutory limits of the deposit

Maximum amount

According to § 2254 para. 1 of the Civil Code, the security may not exceed three times the monthly rent. Advances for services are not included in this limit.

Example:

• Monthly rent: 15,000 Kč
• Advances for services: 4,000 Kč
• Maximum deposit: 3 x 15,000 = 45,000 Kč
• Advances for services are not included in the calculation

What counts as rent

To calculate the maximum security deposit, only net rent is taken, i.e. payment for the use of the apartment. They do not include:

• Advances for energy (electricity, gas)
• Advances for water and sewerage
• Advances for heat
• Fees for waste removal
• Contributions to the repair fund SVJ

Exceeding the limit

If the landlord requires a deposit higher than three times the rent, this is an invalid agreement. The tenant can request the return of an amount exceeding the legal limit.

Example of an unauthorized request:

• Rent: 12,000 Kč/month
• The landlord requires a deposit: 50,000 Kč
• Legal limit: 36,000 Kč
• The tenant is entitled to a refund: 14,000 Kč

Correct handling of the deposit

Taking over the deposit

Recommended procedure:

1. Specify the amount of the deposit clearly in the lease agreement
2. Accept the deposit by bank transfer (documentation)
3. Issue confirmation of deposit receipt
4. Make a thorough handover protocol with photo documentation

Depositing the deposit

The law does not oblige the lessor to deposit the deposit in a special account. Nevertheless, we recommend:

• Separate savings account: The deposit is separated from personal finances
• Records: Overview of individual tenants' deposits
• Transparency: The tenant knows where his money is

Interest on the deposit

Under § 2254 of the Civil Code, the tenant has a right to interest on the security deposit. Calculate and settle the applicable interest under the current law; do not replace it with a fixed repo-rate formula.

Illustrative interest example:

• Deposit: Kč 30,000
• Lease term: 3 years
• Calculate interest using the agreement and current Civil Code rule applicable to the facts
• Total returned depends on the applicable interest and any authorized deductions

When and how to return the deposit

Legal deadline

The landlord must settle and return the deposit balance without unnecessary delay after the lease ends, accounting for justified deductions and the tenant's statutory interest; do not assume a universal one-month deadline.

Return procedure

Step 1: Handover protocol When handing over the apartment, write a detailed handover protocol, which includes:

• Condition of individual rooms
• Meter statuses (electricity, water, gas)
• Inventory of equipment and its condition
• Photo documentation
• List possible defects and damage

Step 2: Calculation of deductions Promptly after the lease ends, calculate justified deductions and document them; the law does not create a universal one-month calculation deadline:

• Rent owed
• Arrears from utility bills
• Costs for repairing damage caused by the tenant
• Cleaning costs (if the apartment is significantly dirty)

Step 3: Statement of the security deposit Prepare a written statement of the security deposit containing:

• Original amount of the security deposit
• Accrued interest
• Individual deductions with documents
• The resulting amount to be returned

Step 4: Refund Return the remaining amount by bank transfer to the tenant's account.

What if the statement of services is not yet finished

If you do not have a service bill by the date of the return of the deposit, you have two options:

• Return the entire deposit and solve the arrears from the bill separately
• Withhold a reasonable part of the deposit for the expected arrears (with written justification)

Authorized deductions from the deposit

What you can deduct

1. Arrears of rent

• Outstanding monthly rent payments
• Provide evidence with an account statement or record of payments

2. Arrears for services

• Based on proper billing of services
• Only proven arrears

3. Damage to real estate

• Damage beyond normal wear and tear
• Evidence with handover report, photo documentation and repair invoice

4. Cleaning costs

• Only if the apartment is in a fundamentally worse condition than when it was handed over
• Routine cleaning (dusting, washing the floor) is not a reason for deduction

What YOU CANNOT tear down

Normal wear and tear:

• Scratched walls from furniture
• Small smudges on the walls
• Worn floor covering in places of regular movement
• Yellowed curtains from the sun
• Small scuffs on door frames

Examples of eligible vs. unauthorized deductions:

Situation	An eligible deduction?
A hole in the plasterboard	Yes
Shabby corners of the walls	No (normal wear and tear)
Broken Window	Yes
Cracked joint in the shower	No (normal wear and tear)
Work Line Burnt Board	Yes
Faded Wallpaper	No (normal wear and tear)
Missing keys	Yes
Carpet stain from furniture	No (normal wear and tear)

Deposit disputes

Most common causes of disputes

1. The lessor does not return the deposit even after the deadline
2. Unauthorized deductions for normal wear and tear
3. Missing transfer protocol at the start of the lease
4. Insufficient documentation of the condition of the flat
5. Disagreement defects

How to resolve a dispute

Step 1: Written demand Send a written demand for the return of the security deposit to the landlord (by registered letter or mailbox). Set a reasonable time limit (14 days).

Step 2: Mediation Consider an out-of-court settlement through a mediator. It's faster and cheaper than going to court.

Step 3: Court If the previous steps don't help, file a lawsuit in district court. The court fee is 5% of the sued amount (minimum Kč 1,000).

Statute of limitations

The claim for the return of the security deposit is time-barred within the general limitation period of 3 years from the moment when the security deposit should have been returned.

Practical examples

Example 1: Problem-free return

Ms. Dvořáková she rented a 2+kk apartment for a rent of Kč 16,000/month. The deposit was Kč 32,000 (2 months). The tenant lived for 2 years, handed over the apartment in good condition.

• Deposit: Kč 32,000
• Illustrative interest amount; calculate statutory interest under the current law
• Deductions: Kč 0
• Returned: Kč 34,720

Example 2: Refund with deductions

Mr. Holub rented a 3+1 apartment for 22,000 Kč/month. The deposit was Kč 44,000. The tenant left after 18 months with one unpaid rent and a damaged floor.

• Deposit: Kč 44,000
• Interest (1.5 years): Kč 2,805
• Rent owed: -22,000 Kč
• Floor repair (invoice): -8,500 Kč
• Returned: 16,305 Kč

Example 3: The deposit is not enough

The landlord had a deposit of Kč 30,000. The tenant owes 3 months' rent (Kč 45,000) and has caused damages of Kč 15,000. Total debt: Kč 60,000.

• The deposit will cover: Kč 30,000
• Remaining debt: Kč 30,000
• The landlord must recover the remaining Kč 30,000 in court

Tips for landlords

1. Always ask for a deposit

Rent without a deposit is a huge risk. Even a reliable-looking tenant can cause damage. The minimum recommended deposit is 2 months' rent.

2. Thorough handover report

The handover report is your most important document. It should contain:

• Status of each room with photos
• Description of equipment and its condition
• Status of all meters
• Number of keys handed over
• Signatures of both parties

3. Photo documentation

When handing over the apartment, take at least 20-30 photos showing:

• General view of each room
• Details of floors, walls and ceilings
• Condition of the kitchen unit and appliances
• Bathroom and WC
• Windows and doors
• Any existing damage

4. Regular inspections

Perform inspections of the apartment at least once every 6 months. Early detection of problems will prevent major damage. Always report the inspection to the tenant in advance.

5. Written communication

Keep all communication regarding the deposit, deductions and returns in writing (e-mail, data box). In the event of a dispute, you will have evidence.

Tips for tenants

1. Insist on the transfer protocol

Never take over the apartment without a detailed transfer protocol. Record every flaw, smudge and damage. Take pictures of everything.

2. Check the amount of the security deposit

Make sure the required security deposit does not exceed the legal limit of 3 months' rent. If so, notify the landlord.

3. Keep the documents

Keep the deposit receipt, handover report and all correspondence with the landlord. You will need these documents when returning the deposit.

4. Report defects

If you discover a defect in the apartment, immediately report it to the landlord in writing. This will prevent you from being accused of damage when you return the apartment.

5. Return the apartment in good condition

Do a thorough cleaning before handing over the apartment. Small repairs (sealing nail holes, replacing light bulbs) can save deductions from the security deposit.

Sample security deposit statement

Security security statement (security deposit)

Landlord: Jan Novák, Pražská 15, Prague 5

Tenant: Marie Svobodová, now apartment Brněnská 8, Brno

Subject of lease: 2+kk flat, Pražská 15, Prague 5

Date of lease ending: 31/12/2024

Date of handing over the flat: 2/1/2025

Composite deposit: Kč 30,000

Illustrative interest amount; calculate statutory interest under the current law

Total available: Kč 32,550

Eligible deductions:

• Rent due for December 2024: Kč 15,000
• Repair of damaged door frame (invoice no. 2025/001): Kč 3,200
• Total deductions: Kč 18,200

K refund: Kč 14,350

The amount will be transferred to account No. 123456789/0100 by 31 January 2025.

In Prague on 10 January 2025

Landlord signature

Summary

The security deposit is an important tool to protect the landlord, but it must be used correctly and in accordance with the law:

• The maximum amount of the security deposit is 3 months' rent (§ 2254 OZ)
• The security deposit must be returned without unnecessary delay after the end of the lease, subject to settlement and statutory interest
• Only authorized and documented costs can be deducted
• The landlord must return the security deposit with interest
• The key to a smooth process is a thorough handover protocol and photo documentation

Correct handling of the deposit protects both parties and prevents unnecessary disputes. Invest time in quality documentation at the beginning of the lease and you will save yourself worries at the end.

How Grento can help you

Grento is the most comprehensive Czech real estate management platform that will help you with the registration of deposits and their management. Clear record of received and returned deposits in one place. Try Grento for free and see for yourself.

> Czech-law scope and editorial note: Legal, tax, accounting, tenancy, service-charge, condominium, metrology, insurance and data-protection statements in this article refer to the Czech Republic and the rules effective for the relevant date. Figures and examples are illustrative, not legal or tax advice. Verify current rules with the relevant Czech authority or a qualified adviser.

> Security-deposit clarification: Under Czech Civil Code § 2254, the ceiling is tied to three times the monthly rent and the tenant has a right to interest. The provision does not create a universal separate-account or 30-day return rule, and service advances do not automatically count toward the rent-based ceiling. Settle the balance and interest without inventing a statutory deadline.