The AIR leases contain an often overlooked Security Deposit provision. When there is an increase in the Base Rent, the Security Deposit increases proportionately. Therefore, if Base Rent increases by 3%, the Security Deposit also increases by 3%.
This landlord-friendly provision is not the standard in custom leases drafted by attorneys. Nevertheless, when lawyers are involved in negotiating the AIR lease, this provision often remains in the final lease.
Tip: If you represent a tenant, consider informing the tenant of this provision during lease negotiations. At the minimum, advising the tenant of this provision will prevent the tenant from being surprised by the increase. In this way, you may avoid harming your relationship with the tenant.
Section 5 of the AIR lease forms requires written notice from the landlord for the Security Deposit increase to be effective:
What is your experience with this provision? Post your comments or questions below.
Usman, great info. No landlord that I have represented to the best of my knowledge enforces this provision, possibly Property Managers do
Thank you for your comment. I agree that it is frequently overlooked by landlords. A few of my landlord clients do enforce it.
Good article, as usual, Usman. In San Diego office leasing, the Security Deposit is often equal to the last month of scheduled rent, which is even more favorable for landlords. For strong credit tenant, however, there is usually no deposit required.
Thanks Randall, I appreciate your regular feedback.
Randall represents tenants exclusively in the San Diego area. His profile page is here: http://www.jll.com/people/4767/randall-wood.