Security Deposits in Portugal: Limits and Return Laws

The security deposit (known as "caução" in Portuguese) plays a fundamental role in urban leasing contracts in Portugal. The New Urban Lease Regime (NRAU) dictates clear rules on the maximum amount a landlord can request for the deposit and how it should be returned at the end of the contract.

Security Deposit Limits in Portugal

In residential lease agreements executed in Portugal, recent legal frameworks (such as the measures in the Mais Habitação package) have established a clear limit. For a security deposit, landlords can request an amount corresponding to a maximum of two (2) months' rent.

In addition to the security deposit, landlords in Portugal often request the advance payment of rent. The legal limit also restricts the payment of advance rents to the equivalent of two (2) months' rent at the beginning of the lease agreement. In short, the absolute maximum initial payment upon signing would encompass the first month's rent, up to 2 advance rents, and 2 months' rent as a deposit.

The security deposit covers:

• Rent or payments not made on time;
• Utility bills that could not be redirected (in case of non-payment);
• Cleaning costs or repair of damage beyond "normal wear and tear" that cause unexpected deterioration of the leased property.

Maintenance Obligations and Normal Wear and Tear

The landlord cannot deduct amounts from the security deposit to cover "natural wear" or "normal wear and tear" of time on the property and its contents. Natural wear includes things like minor scratches on the floor or color fading of the wall paint over the years, something inherent to the continued habitation of a person and expected from the tenant's prudent use (Article 1043 of the Portuguese Civil Code).

Return of the Security Deposit

On the date of contract termination and delivery of the property, the landlord must evaluate the space and return the amount. Although there is no rigidly framed deadline with a specific number of days in the NRAU, except by mutual agreement, case law establishes that the landlord is expected to return it immediately after the final inspection.

If there are deductions to be made (due to repairs proven by infractions and destruction of furniture/appliances, among others), the landlord must provide the tenant with a proper detailed and justified list of the estimate/receipt of the deduction.

In case of unjustified refusal to return the amount, tenants can file an action in the Julgados de Paz (Portuguese proximity courts) or civil court to compel payment, plus interest for late payment.

Preventing Disputes: The Inspection Report

The best practice in Portugal to protect both parties (landlord and tenant) is the attachment of an inspection report (inventory and photographic report of conditions) when the lease agreement is signed and equally at the act of closure of the bond (move-out). This clearly delineates what damage was or was not present before and after the occupation of the space.

Landager allows property managers to attach inspections and photos to rental profiles in Portugal, ensuring a smooth return process supported by inspection reports.

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