Are rental deposits legal?

In Colombia, it is common for some landlords to require deposits as a condition for renting a property. These payments are often considered a form of security against possible damage or non-compliance, but they often raise questions about their legality and correct application. Although this is a widespread practice, not everyone knows what the law says about it or what the permitted limits are. We will tell you whether rental deposits are legal.

Is it legal to require a rental deposit in Colombia?

No. In Colombia, it is not legal to require cash deposits or other collateral as a condition for renting urban housing. This is clearly established in Article 16 of Law 820 of 2003, which regulates the rental regime. The law expressly prohibits landlords from imposing such conditions, even if they are presented under other names or agreed upon in documents other than the lease agreement.

It is important to note that the only exception allowed by law is the provision of guarantees for the payment of residential public utilities, provided that they do not exceed the value of two consecutive billing periods. These guarantees must be in favor of the service provider and cannot be given directly to the landlord. The Superintendency of Residential Public Utilities is the entity responsible for enforcing compliance with this provision.

How is the deposit for utilities handled?

Unlike deposits that are given directly to the landlord, which are prohibited by law, the only financial backing allowed in an urban housing lease agreement is the guarantee for the payment of utilities. This must be deposited directly in the name of the service provider, never in the name of the property owner.

When a person signs a lease agreement, for example, for an apartment for rent in Medellín, they must go to the corresponding utility company and make the deposit, indicating that it is a guarantee to cover consumption during their stay in the property. At the end of the contract, they must notify the company of the termination so that it can verify whether there are any outstanding bills. If there is no debt, the amount deposited will be returned to the tenant. Otherwise, the amount will be used to cover the balances.

How is the value calculated?

Decree 1077 of 2015 establishes a clear formula: take the average consumption over the last three months, increase it by 50%, and then multiply it by two. This gives a value that is equivalent, on average, to three months of consumption, which guarantees that there is a backup in case of non-compliance. It is important to note that the money remains entirely in the custody of the utility company, and the owner has no access to or right to use these funds, even when the contract ends.