Security Deposits in Colombian Commercial Leases

There is a frequent myth in Colombian real estate, derived from the famous prohibition of the "deposit month" and "double guarantee." Although this is an unbreakable ban for any residential apartment or home, these statutes do not apply to commercial premises, corporate businesses, or industrial establishments governed under the Colombian Commercial Code (effective 1 January 1972).

Superior Commercial Flexibility

A commercial lease rests on the fundamental principle of "Contractual Autonomy" (Art. 1602, Civil Code) and the application of civil rules to commercial matters (Art. 822, Commercial Code). While the Commercial Code (Arts. 518-524) regulates matters of renewal and protection of the commercial establishment, general lease obligations and deposit validity are governed by the Civil Code (Arts. 1973-2044).

Commercial law does not establish prohibitions on receiving cash deposits or setting up funds, months in advance, or other equivalent consignment quotas as it rigidly does to protect the inherently fragile population of residential housing under Art. 16 of Law 820 of 2003.

1. Can You Ask for a Cash Deposit for a Commercial Space?

Yes. Two legal entities (or formal registered merchants) negotiating specifically for the transactional branch of an SME or industrial warehouse can draft and agree upon a "Contingencies/Material Risks Deposit Clause." You, as a commercial property owner, have the legitimate civil right to request:

• One, two, or 'x' amount of months as an advance, deductible only on the final termination date following property inspection.
• Large pre-authorized bonds to cover not only the walls but integral adaptations, heavy machinery, or adherent mercantile obligations placed on your side of the common project.
• Collateral sums destined for legal safeguards or fiduciary protections with local real estate trusts (fideicomisos), generally seen for strong retail chains located in triple-A locales or massive corporate spaces.

However, the amount and exact method must be impeccably defined on paper. According to Art. 3 of the Commercial Code, mercantile custom has the same authority as law in the absence of a statute, but it must be certified by the local Chamber of Commerce. Currently, there is no certified custom in Bogotá regarding the mandatory nature or precedence of security deposits over the written contract.

2. Policies and Insurance (The Preferred Practice)

Just as in residential practices, commercial owners often wrap themselves in the corporate buffer of insuring rent via a third party with Pólizas De Arrendamiento (Rental Insurance). This is still vastly preferable to holding millions in transitionary cash tied up and subject to accounting battles with owners or tenants over damages regarding an internal business remodel. With policies, the insurer handles the chase and pays you promptly.

3. Essential Requirement (Monetary Correction and Indexation)

Be very careful with the phrasing of the deposit. The Supreme Court of Justice (Sentencia SC-11332-2015) has established that sums of money held as a guarantee must be returned with indexación (monetary correction based on the IPC/inflation) to maintain the real value of the currency and prevent "enriquecimiento sin causa" (unjust enrichment).

Therefore, it is legally recommended to explicitly stipulate the terms of this return. Unless the funds are applied to repairs or the contract explicitly waives certain inflationary adjustments, courts may require the return of the deposit adjusted for inflation to reflect its current value at the time of liquidation.

Manage the collection upon entry of policies digitally without fearing legal backlash or illegally crossing residential statutes. Implement massive corporate tracking smoothly with customized safeguards and limit warnings tied to the commercial wing of your real estate portfolio exclusively using Landager.

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