Deposito Cauzionale (Security Deposit)

A sum of money held as a guarantee in a rental contract. In residential leases, the law allows a deposito cauzionale up to 3 months’ rent. This deposit is returned to the tenant at the end of the lease if no damages or unpaid amounts remain. The landlord must not use the money during the tenancy (and by law, for residential leases, should pay the tenant interest on it each year). In purchase transactions, a similar concept is the caparra (down payment) but that has different legal implications. For rentals, the deposit protects the landlord against damage to the property or tenant’s default on rent or bills. It’s usually specified in the contract and held by the landlord (often not in a separate escrow, except by agreement).