Security Deposits

Security deposit is a contractually agreed-on amount of money paid in advance and held in trust to secure the delivery of products or to induce other contractual parties to act accordingly. If contractual parties do not involve a third party, such as a bank or another financial or nonfinancial company of good credit standing, which could serve as a trustworthy guarantor, there is a need to lodge monetary means or close substitutes. The lack of close distance in a globalized village of today has further supported the growth of security deposits in various forms—not only in brick-and-mortar businesses but also in new economies.


In its most narrow and commonly known meaning, a security deposit is used in commercial and household leases. Landlords request and receive deposits ...

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