Caution deposits in Nigeria: how much to charge and how to refund fairly
A caution deposit (also called a caution fee or security deposit) protects you against damage and unpaid bills. It is also the most common source of move-out arguments. Clear rules at the start make the refund simple at the end.
Not legal advice. No single national rule fixes the size of a caution deposit. What you agree in the tenancy agreement usually governs, so write it down carefully.
What the deposit is for
The deposit is the tenant’s money, held by you as security. It can cover:
- damage beyond normal wear and tear;
- unpaid utility bills, service charge or estate dues the tenant was responsible for;
- keys not returned, or cleaning needed to restore the property to its move-in condition.
It is not extra rent. Keeping it without a reason, or treating it as a fee, damages trust and invites a claim.
How much to ask for
Many landlords set the deposit as a share of the yearly rent, often somewhere between 5% and 10%, or a fixed sum for furnished or high-value properties. A useful guide is the realistic cost of repainting, replacing a few fixtures and covering a month or two of bills.
| Yearly rent | Deposit at 5% | Deposit at 10% |
|---|---|---|
| ₦1,200,000 | ₦60,000 | ₦120,000 |
| ₦2,400,000 | ₦120,000 | ₦240,000 |
| ₦5,000,000 | ₦250,000 | ₦500,000 |
Write the rules into the agreement
- The exact amount and that it is a refundable deposit, not rent.
- What it may be used for, using the list above.
- How “fair wear and tear” is treated: faded paint and worn carpets from normal living are not damage.
- How soon after move-out it will be refunded, for example within 14 or 30 days.
- That deductions will be listed in writing with receipts or quotes.
Protect yourself at move-in
A refund dispute is decided by evidence. At move-in, walk the property with the tenant and record its condition room by room, with dated photos. Both of you sign the inventory. Our inspection checklist shows what to record.
Issue a separate receipt for the deposit, clearly labelled, so it is never confused with rent. See how to issue a rent receipt.
At move-out
- Inspect the property with the tenant on or just before the last day, using the move-in inventory.
- Take photos of anything that has changed.
- Check final utility bills and service charge statements.
- Get quotes for any repairs you intend to deduct.
- Send the tenant a written statement: deposit held, each deduction with its reason and cost, and the balance being returned.
- Refund the balance to the tenant’s account within the agreed time.
What not to do
- Deduct for normal wear and tear, or for repairs that were needed before the tenant moved in.
- Use the deposit to cover the last months’ rent without a written agreement.
- Hold the deposit for months with no explanation.
Keep it on record
In Landlord Reminder you can add the inventory, photos and deposit receipt to each tenancy, encrypted on your device, so the evidence is ready when the tenancy ends.