Security Deposit and Lease Agreement

Overview of what you can expect as a tenant leasing a commercial real estate property:

As a tenant, you are making an offer to occupy the landlord’s property for a set term with a set rate in place. Leasing rates are expressed in many different ways which we will not get into in this article. Typically, the security deposit made with a lease agreement is a check is cut along with an execution of the lease, in some instances a tenant can state that they will issue a security deposit check within 48 hours of an accepted lease execution from the landlord (meaning the landlord signs the lease documents). In the 9 years Shire Commercial has been working within Austin area on commercial property, there has only been one issue with a security deposit.

There was one instance where a landlord did seize a tenant’s security deposit after finding out once the lease was executed that the landlord’s commercial  property was not suited for the usage as a day care facility because the fire marshal said they needed a sprinkler system installed.  Once the landlord found out , he did not want to put 100% of the cost of the sprinkler system into his commercial property and the tenant did not have the funds to do so either. During this back and forth, the landlord kept the tenant’s security deposit and did not issue a refund.Austin lease agreement sample

A tenant can always make a postdated security deposit check made out to the landlord so that the deposit check commences upon the lease  execution date of your agreement. Shire Commercial can help tenants negotiate their security deposits depending on the amounts that are due, if your security deposit is large, perhaps you can issue a check for 50% of the security deposit due and the balance is due upon your move in date.  How are security deposits for commercial property calculated? A review of the tenant’s financials is completed by the landlord or sometimes by their listing agent.  As a tenant you could be looking at 2 scenarios for issuing a check.

  • A security deposit would be your first month’s rent if you have good credit
  • A security deposit would be your last month’s rent – more typical

Getting a refund on a lease agreement security deposit?

Will you get your security deposit refunded? If you have not damaged the commercial property you are in and have not been late on your rent , the answer is yes you should and it typically works just like an apartment complex would refund your money after you move out.  You will want to pay attention to any details in your lease agreement that stipulate the move out condition of your space.

Along with a security deposit on commercial property in Austin it is customary for the tenant to pay the landlord the first month’s rent (full rent) in advance along with their security deposit.  Shire Commercial helps tenants negotiate all aspects of office and warehouse leasing in the Austin area , a security deposit is just one of the attributes that needs to be looked at before any tenant approves and executes a lease on a commercial property.