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What are Refundable and Non-Refundable Deposits?

What are Refundable and Non-Refundable Deposits?


Refundable deposits are those a lessee may receive back at the end of a lease agreement, while non-refundable deposits will not be returned at the end of the agreement.

Lessors may charge two different types of deposits

If you’ve worked with a lease before, you’re probably familiar with a security deposit, which is a refundable deposit that you’ll get back at the end of your lease term if you meet certain requirements. Some lessors may also require non-refundable deposits, which are surcharges or fees on top of the refundable security deposit. These fees could pay for cleaning, maintenance, last month’s rent, and more. However, the lease agreement should clearly label these fees so that the lessees know their non-refundable costs.




Suppose you’re renting space for your municipality for the upcoming year. The monthly rent is $2,000, and the landlord requires a security deposit equal to a month of rent. The $2,000 security deposit is refundable and will be returned to the city if the city maintains the space during its time there.

The lease also includes a few other fees, which could be considered non-refundable deposits. These fees are for parking spaces, fees to facilitate service animals, and other administrative costs. The city won’t get these fees back at the end of its lease, meaning they are non-refundable deposits.

What’s important here?

Additional fees included in lease agreements are often referred to as non-refundable deposits, but they aren’t deposits. They are expenses. Instead, they should be clearly outlined in the lease agreement as fees or surcharges that won’t be returned. It’s also important that refundable deposits and non-refundable fees be listed separately in the lease.