The Deposit may be any
amount that the parties agree to and need not only be the equivalent of 1 (One)
month’s Rent. If there is any doubt as to the integrity of the Tenant, a larger
Deposit should be taken. The Deposit must be held in an interest bearing.
Unlike in the case of a Residential Lease, where use of the Deposit during the
subsistence is prohibited in terms of the Rental Housing Act 50 of 1999, in the
case of a Commercial Lease the Deposit may be utilised to cover arrear costs
during the subsistence of the Lease. In such an event, the Tenant must,
however, IMMEDIATELY reinstate the Deposit to the original amount. The reason
for this is twofold, firstly because by utilising the Deposit early, the amount
of interest generated will be affected and secondly because if the Deposit is
whittled away during the subsistence of the Lease, there is no guarantee that
there will be any funds left upon termination of the Lease to cover damage to
the Premises, further arrear Rental, lost keys and the like. At the end of the
Lease Agreement the Deposit, less any deductions must be refunded to the Tenant.
For the reasons stated in clause 1.1, when calculating the Deposit amount, one
must take into consideration VAT.