Deposit payment when terminating lease early? | iGuide

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Do I have to pay a deposit when terminating a lease early?

This article answers the question of whether or not the deposit must be returned when terminating a rental contract early. It provides information on relevant Vietnamese legal regulations, helping tenants and landlords understand their rights and obligations in the event of early termination of the contract, thereby avoiding unnecessary disputes.

Renting a house is not a case where a deposit is required because this is only an act to ensure the performance of the rental contract.

Pursuant to the provisions of Article 328 of the 2015 Civil Code, it is specifically stipulated as follows:

"Article 328. Deposit

1. A deposit is when one party (hereinafter referred to as the depositor) delivers to the other party (hereinafter referred to as the deposit recipient) a sum of money or precious metals, gemstones or other valuables (hereinafter referred to as the deposited property) for a period of time to secure the conclusion or performance of a contract.

2. In case the contract is concluded or performed, the deposit shall be returned to the depositor or deducted to fulfill the payment obligation; if the depositor refuses to conclude or perform the contract, the deposit shall belong to the deposit recipient; if the deposit recipient refuses to conclude or perform the contract, the deposit shall be returned to the depositor and an amount of money equivalent to the value of the deposit, unless otherwise agreed."

Accordingly, to determine whether a deposit must be paid when terminating a rental contract early, the two parties need to base on the previous agreement stated in the rental contract and can determine.

In some cases, the deposit will not be refunded, specifically as follows:

- Neither party paid a deposit before signing the rental contract.

- Both parties agree not to charge a deposit penalty if one of the two parties terminates the lease contract early.

- The deposit is deducted from the rent the following month when the tenant moves into the rented house.

- Both parties are at fault or there is a force majeure event or objective obstacle.

What compensation is given when terminating a lease early?

Clause 4, Article 132 of the 2014 Housing Law stipulates that if either party violates the regulations on prior notice of termination of the lease contract, causing damage, compensation must be paid.

The parties may agree on the level of compensation, form (cash, in kind, work performance), method (one time, many times). In case an agreement cannot be reached, the damaged party may file a lawsuit in court to request compensation.

Regarding the level of compensation for damages, the following types of damages can be identified:

- Property damage

- Health damage.