Security Deposit India: What You Need to Know Before Paying

When you rent or buy property in India, a security deposit, a sum of money paid upfront to protect the landlord or seller against damages, unpaid rent, or breach of contract. Also known as refundable deposit, it’s not a fee—it’s money you should get back if you follow the rules. But too many people lose it because they don’t know the law, the paperwork, or what counts as "normal wear and tear."

Under the Rental Housing Act, a set of state-level regulations governing tenant-landlord relationships in India, landlords can ask for up to two months’ rent as a security deposit for residential properties. In commercial leases, it’s often higher—but it must be clearly written in the agreement. The deposit should be held in a separate account, not mixed with the landlord’s personal funds. And yes, you’re legally entitled to get it back within 21 days after you move out, as long as you’ve paid all dues and left the place in reasonable condition. No vague excuses like "the walls look old" or "the floor needs cleaning"—those aren’t valid reasons to withhold your money.

What most people miss is that RERA, the Real Estate (Regulation and Development) Act, 2016, which brought transparency to property transactions in India also applies to deposits in under-construction projects. If you’re buying a flat and paid a booking amount or advance, that’s not the same as a security deposit. But if the builder holds your money after possession and refuses to return it unless you sign something, that’s a red flag. RERA requires all payments to be tracked and refunded as per contract terms. And if they don’t? You can file a complaint online in under 10 minutes.

Don’t assume your deposit is safe just because you have a receipt. Always get a stamped, signed agreement that lists the exact amount, the purpose, the conditions for refund, and the timeline. Take photos of the property when you move in and again when you move out. Keep all communication in writing—WhatsApp messages count. Banks and builders often delay refunds by asking for "final inspection" or "utility clearance," but those can’t legally hold up your money forever. If they do, you can claim interest under Section 18 of RERA.

There’s no national rule that says how much a deposit should be, but most states follow the two-month rent guideline. In cities like Delhi, Mumbai, and Bengaluru, it’s common to see deposits of three or even four months’ rent—but that doesn’t make it legal. If you’re pressured to pay more, say no. Walk away. There are plenty of landlords who follow the rules. And if you’re the one collecting the deposit? Don’t be the one who loses trust because you didn’t follow the law.

What you’ll find below are real, practical guides from people who’ve been through it—how to demand your deposit back, what to do if your landlord disappears, how to write a legal notice without a lawyer, and how to spot fake clauses in rental agreements. These aren’t theoretical tips. They’re the exact steps that helped tenants in Pune, landlords in Lucknow, and buyers in Prayagraj get their money back without a court battle.