worried about "absolutely forfeit security deposit" clause in tenancy agreement

  1. #1

    Join Date
    Sep 2011
    Posts
    21

    worried about "absolutely forfeit security deposit" clause in tenancy agreement

    Hi,
    Am about to sign a tenancy agreement.
    I was worried about the wordings concerning the forfeiture of security deposit.
    In the agreement it reads:
    "If the Tenant shall commit a breach of any of the terms and conditions herein contained, this Agreement shall absolutely terminate and the Security Deposit paid under this clause shall be absolutely forfeited to the Landlord as and for liquidated damages (but not as penalty) and the rights and remedies given to the Landlord by this clause shall not prejudice any other right of action or any remedy of the Landlord in respect of such breach by the Tenant."

    I understand this as meaning that my whole 2 months' security deposit is forfeited when I inflict the slightest damage to the flat -say I break a kitchen cabinet door, I lose two months' rent.

    My agent says this is just a standard clause and nobody has ever commented on it. I don't really want to get into changing standard agreements because I know things can get complicated and I don't want to needlessly annoy my landlord upfront.
    Am I overly suspicious?
    Anyone any experience with this?


  2. #2

    Join Date
    Aug 2006
    Posts
    9,353

    Have you read what the actual terms and conditions are? I would expect that they include things like paying your rent on time, not subletting, paying utilities and keeping the place in "good repair". Note that the last point typically has an allowance for wear and tear.

    If you break a door and then get it fixed, then there is no contravention of the terms and conditions, so there is no reason to forfeit the deposit.

    Google "hong kong tenancy agreement". I think that most rental arrangements use pretty much the same form. In fact, do that anyway and check that the standard form is the same as what you are using- any deviations from the standard would be worth further examination.


  3. #3

    Join Date
    Sep 2011
    Posts
    21

    Thanks a lot for the reply jgl.
    I did google before and only found a similar clause in Agreement as used by Century 21 (except it doesn't use "absolutely" but not sure that matters).

    I found another model which my agreement seems to be more or less following with quite different wordings for this paragraph, which seem to be more precise -and less worrying to me.

    "[...] the Landlord may deduct any loss or damage suffered by the Landlord as a result of the Tenant’s breach from the Security Deposit without prejudice to any other right of action or any remedy of the Landlord in respect of such breach of the Tenant."

    So I might suggest these to my agent -but I already anticipate she might not be so keen to change her standard form...


  4. #4

    Join Date
    Mar 2013
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    2,455

    I added a clause to my agreement to say the LL was responsible for all existing appliances- my agent had no issue with it.


  5. #5

    Join Date
    Sep 2011
    Posts
    21

    Thanks all,
    My agent agreed to change the clause without a problem so I am guessing I was indeed overly suspicious...
    Better be safe than sorry though.


  6. #6

    Join Date
    Oct 2010
    Posts
    17,777

    I read that as you can forfeit the deposit to cover damages, but landlord can't take it as a penalty. Seems pretty big standard to me in rental contracts.