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Security Deposits – Which One Is Best?

Welcome. My name is Rob and I’m a Commercial and Retail Property Manager with over 20 years experience.

In this next short video, I’ll briefly talk about the difference between a cash bond and a bank guarantee and a personal guarantee and give you a few tips to decide what is better for you.

Usually, when I ask my Landlords if they want a cash bond, a bank guarantee or a personal guarantee they say, well it’s all the same just get one but that’s not actually true. Firstly, your cash bond which is usually just a monetary deposit made by the Tenant, their Agent can hold it, the owner can hold it, there’s no rental bond law to deal with. With one exception, of retail lease. The downfall in collecting a cash bond is that if it’s a retail lease, you actually have to lodge it with the retail tenancy unit, the Government. Which is all fine except when you draw down on this bond it can be a problem to get out, especially if a Tenant doesn’t agree with you this then leads into mediation or tribunal.

The A bank guarantee is basically a piece of paper, a one or two-page document from the bank or a lending institution which says that if the Tenants fail to meet its obligations they will pay this lump sum amount, whatever amount is on that bank guarantee. The downfall of a bank guarantee is that you need the original. If you lose that bank guarantee then don’t hold your breath.

A personal guarantee is exactly that, it’s a guarantee usually from the director or a shareholder saying that if the Tenant defaults on their lease or their obligations they will step in. A downfall of a personal guarantee is that you really need to research that person and know what assets they actually have if any.

For detailed and asset-specific advice, please feel free to contact me , I’m always happy to help.  

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