1. Deposit Collection Process
Procedures for collecting security deposits at lease signing
Standard Deposit Amounts
Security deposit amounts are determined by property type and are clearly stated in the tenancy contract:
Collection Process Flow
Follow these steps when collecting a security deposit:
Accepted Payment Methods
Security deposits may only be collected via these methods:
| Payment Method | Acceptable | Notes |
|---|---|---|
| Bank Transfer | ✓ Yes | Preferred method. Retain transfer confirmation. |
| Manager's Cheque | ✓ Yes | Bank verified. Deposit immediately. |
| Personal Cheque | ✓ Yes | Must clear before key handover. |
| Cash | ⚠ Limited | Maximum AED 10,000. Manager approval required. |
| Credit Card | ✗ No | Not accepted for security deposits. |
Receipt Requirements
- Company name and logo
- Unique receipt number
- Date of receipt
- Tenant full name (as per Emirates ID)
- Property address and unit number
- Deposit amount in figures and words
- Payment method and reference
- Statement that deposit is refundable per contract terms
- Authorized signature and company stamp
Never hand over keys until the security deposit is fully received and cleared in the escrow account. Post-dated cheques for deposits are not acceptable.
2. Escrow Account Management
Proper handling of tenant deposits in trust
Escrow Account Overview
All security deposits must be held in a designated escrow account, separate from the company's operating funds. This protects tenant funds and ensures compliance with regulations.
🔐 Escrow Account Details
Escrow Management Rules
- All deposits must be transferred to escrow within 24 hours of receipt
- Escrow funds must never be used for company operations
- Escrow funds must never be used for property repairs (use owner funds)
- Maintain individual deposit records for each tenant
- Reconcile escrow account monthly with deposit register
- Dual authorization required for any withdrawal
- Withdrawals only permitted for legitimate refunds or deductions
- Retain all bank statements and reconciliation records
Record Keeping Requirements
Maintain accurate records for each deposit held:
| Information | Description |
|---|---|
| Tenant Name | Full legal name as per contract |
| Property Reference | Building name and unit number |
| Deposit Amount | Amount received (AED) |
| Date Received | Date deposit was collected |
| Payment Method | Transfer/cheque reference number |
| Lease Start Date | Start of tenancy period |
| Lease End Date | Expected end of tenancy |
| Status | Held / Refunded / Partially Deducted |
The Finance team must reconcile the escrow account balance with the deposit register by the 5th of each month. Any discrepancies must be investigated and resolved immediately. Reports should be submitted to the Finance Director.
3. Deduction Guidelines
Criteria for making legitimate deposit deductions
Permissible Deductions
Security deposits may only be used to cover legitimate costs. All deductions must be documented and reasonable.
- Deep cleaning (if not done by tenant) AED 400-800
- Kitchen deep clean AED 150-250
- Carpet shampooing AED 300-600
- AC filter replacement AED 100-200
- Wall repair & paint (per room) AED 800-1,500
- Broken door/window AED 500-1,200
- Floor tile replacement AED 200-400
- Appliance damage Actual cost
- Outstanding rent As invoiced
- Unpaid utilities (if landlord account) As billed
- Service charges due As invoiced
- Late payment fees Per contract
- Missing keys / access cards AED 100-300
- Missing inventory items Replacement cost
- Removal of abandoned items AED 200-500
- Contract breach penalties Per contract
Non-Permissible Deductions
The following may NOT be deducted from the security deposit:
- Normal wear and tear (faded paint, minor scuffs, worn carpet)
- Pre-existing damage documented at move-in
- Repairs due to building defects or landlord negligence
- Upgrades or improvements to the property
- Items not documented in the move-in inspection
- Excessive charges above market rates
- Agent fees or administrative costs
Documentation Requirements
To support any deduction, you must have:
- Move-in inspection report with photos
- Move-out inspection report with photos
- Comparison photos showing the damage
- Repair quotes from licensed contractors (2 minimum)
- Actual invoices for work completed
- Written communication to tenant about damage
- Tenant's acknowledgment (if obtained)
All deductions must be fair, reasonable, and properly documented. When in doubt, err on the side of returning the deposit. Disputes over small amounts damage relationships and may lead to costly legal proceedings.
4. Refund Procedures
Process for returning security deposits to tenants
Refund Timeline
UAE law requires security deposits to be settled within 30 days of lease termination. Follow this timeline:
Refund Calculation Example
Refund Statement Template
Refund Process Checklist
- Move-out inspection completed and signed
- All keys and access cards returned
- DEWA/utilities final clearance obtained
- No outstanding rent or charges due
- Deduction statement sent to tenant
- Tenant bank details confirmed (IBAN)
- Finance approval obtained for transfer
- Escrow withdrawal authorized (dual signature)
Refund Payment Methods
| Method | Processing Time | Notes |
|---|---|---|
| Bank Transfer (UAE) | 1-2 business days | Preferred method. Requires tenant IBAN. |
| Bank Transfer (International) | 3-5 business days | For tenants relocating overseas. SWIFT details required. |
| Manager's Cheque | Same day collection | If tenant prefers or no bank account. |
Failure to return deposits within 30 days without valid justification may result in legal action through the Rental Dispute Center. Always document thoroughly and communicate clearly with tenants throughout the process.
📞 Deposit & Finance Contacts
A smooth deposit refund process leaves tenants with a positive final impression, leading to good reviews and referrals. Aim to process refunds faster than the legal requirement whenever possible.