Security Deposits in Commercial Real Estate in Ukraine

Securing the performance of obligations (particularly in the form of a guarantee payment or security deposit) is a standard practice in the field of commercial leasing in Ukraine. It serves as a security mechanism for the owner of an office center, warehouse complex, or restaurant space, mitigating risks associated with property damage or tenant default.

1. Deposit Size and Its Economic Nature

Unlike the residential sector, where the deposit is usually equal to one month's rent, rates in the commercial real estate market (especially for large corporations in Kyiv, Lviv, or Dnipro) are often higher:

• For office spaces and small retail, the standard is a security deposit equal to 1-2 months' rent.
• For retail spaces in premium shopping centers or industrial premises requiring significant redevelopment, the landlord may request a deposit equivalent to 3-6 months' rent, typically pegged to a stable foreign currency equivalent.

Legal Classification (Crucial for Tax Purposes): The money transferred to the owner may be named differently in the contract, and this determines accounting (VAT and income tax):

1. "Advance Payment" (for the last month): If the amount is treated as an advance, it instantly becomes subject to taxation for the landlord at the moment of receipt (VAT must be accrued immediately and income recognized for the single tax or corporate income tax). This is the least convenient financial route.
2. Security (Guarantee) Payment: The recommended legal structure, based on Articles 546 or 560 of the Civil Code. This sum acts as security for the performance of obligations. It is not credited as rent during the lease term but is held by the landlord until the end of the tenancy. This structure may offer tax advantages, as the funds are not considered revenue at the time of transfer.

2. Withholding Funds and Covering Damages

A commercial lease agreement must exhaustively detail when the landlord has the right to debit (confiscate) money from the deposit. This usually happens without the tenant's consent ("by way of unilateral extrajudicial set-off of counterclaims") in the following cases:

• Arrears on rent exceeding X business days.

• Non-payment of utilities: Failure to pay utility bills or operational expenses (OPEX).
• Property damage: Compensation for physical damage to the premises, such as damage to storefronts, walls, or ventilation systems.
• Contractual Penalty: It is common for contracts to include a clause where the security deposit serves as a penalty if the tenant terminates the contract without the required notice.

"Top-up" Obligation: Commercial contracts almost always contain a rule: if the landlord legally debited part of the deposit (for example, to cover an electricity debt), the tenant is obliged to fully restore and top up the security deposit to its initial full amount within a very short period (e.g., within 3-5 banking days).

3. Procedure for Returning the Security Payment

During the final handover of the premises to the owner, strict corporate standards apply:

1. Official Handover Act: A detailed Acceptance-Transfer (Return) Act is signed. The premises must be returned in the same condition as it was received (excluding agreed-upon normal wear and tear). If the tenant was obligated (per the contract) prior to moving out to remove all their glass partitions, patch holes in the ceiling, and plaster the walls ("restitution to Shell & Core condition"), they must complete this before signing the Act.
2. Timeframes for Return: If the tenant has faithfully paid all bills and left no destruction, the deposit is subject to mandatory refund. In B2B practice, this does not happen "on the day the keys are handed over," but is delayed by 10-30 business days, because the owner (or their management company) needs time to receive the final consolidated utility bills from service providers.

Landager transforms the management of security deposits for the B2B real estate segment. The corporate dashboard segregates operational cash from guarantee funds. A property manager can reconcile the balance of a guarantee payment against the current currency equivalent, automate invoicing for top-ups following deductions, and ensure a transparent digital audit trail.

Next: Eviction Process for Commercial TenantsVista previa no disponible