Security in a Lease Agreement: What You Can Require and How to Enforce It

Under Section 25J of the Rental and Borrowing Law, the total security involving a financial expense for the tenant, such as a cash deposit or bank guarantee, must not exceed the lower of two amounts: three months' rent or one-third of the rent for the entire lease term.

For service details: Legal Support for Property Owners

Example: Monthly rent is 6,000 ₪. Under a one-year lease, three months' rent is 18,000 ₪ and one-third of the annual rent is 24,000 ₪, so the cap is 18,000 ₪. Under a six-month lease, one-third of the rent for the term is 12,000 ₪, so that is the cap.

Security that does not cost the tenant money at signing, such as a promissory note, security check or personal guarantee, is not subject to this cap. However, the enforcement rules detailed below apply to these forms of security as well. These rules apply to residential leases, with certain exclusions, such as very short leases or leases with exceptionally high rent, so it is worth checking the specific agreement.

In practice, many landlords choose a combination: a deposit or bank guarantee up to the statutory cap, providing quick access to funds, alongside a promissory note backed by guarantors for a higher amount, adding protection against larger debts. This keeps the readily accessible security within the legal limit, while the additional security provides a collection tool if the loss is greater.

A few practical rules: make sure the bank guarantee remains valid for long enough after the lease ends, screen the guarantors as well as the tenant, and ensure that the promissory note and guarantee are properly drafted. Poorly drafted security can prove worthless precisely when you need it.

The law lists four circumstances in which security may be enforced, each with a limit on the amount:

• The tenant has not paid rent: The unpaid rent, plus indexation adjustments and interest under the lease
• The tenant has not repaired a defect for which they are responsible: The repair cost
• The tenant has not paid ongoing charges (municipal property tax, electricity, water, building committee fees): The amount owed
• The tenant has not vacated the apartment at the end of the lease: The amount specified for this in the lease

A lease clause allowing the landlord to "forfeit" the entire deposit for any breach, however minor, contradicts the law and is invalid. The amount recovered must always correspond to the actual loss or debt.

• Check that you have grounds – Confirm that the breach falls within one of the four circumstances and calculate the exact amount you may recover.
• Give advance notice – The law requires reasonable advance notice to the tenant of your intention to enforce the security, and an opportunity to remedy the breach. Written notice is recommended, preferably through a lawyer.
• Recover only the permitted amount – If the tenant has not remedied the breach, recover the calculated amount and no more.
• Document everything – Keep the notice, proof of delivery, calculation and any repair receipts or quotes.
• Return the balance on time – At the end of the lease, you must return the security or its remaining balance to the tenant within 60 days of the apartment being returned to your possession or the tenant's debts being settled, whichever is later.

In cases of nonpayment, legal support for tenant eviction from the very first notice ensures that security is enforced lawfully and coordinated with other steps, such as a formal demand and an eviction claim.

• Requiring a deposit or bank guarantee above the cap – The excess demand is invalid and may undermine your credibility if the dispute reaches court.
• Enforcing security without advance notice – Even when the debt is clear, skipping notice exposes you to a claim for repayment.
• Recovering more than the debt – Every shekel above the permitted amount may have to be returned to the tenant, sometimes with legal costs added.
• Delaying the return of the deposit – Holding the money beyond the statutory deadline without an outstanding debt that justifies doing so.
• An expired guarantee – A bank guarantee that expires on the day the lease ends will not help if the tenant fails to vacate or leaves unpaid debts.

Sometimes the debt exceeds the available security: several months of unpaid rent, substantial damage and a delay in vacating. In this situation, enforcing the security is only the first step. Eviction itself is pursued through a claim for possession of rented premises, as explained in our guide to evicting a tenant who does not pay, while the remaining debt is pursued in a separate monetary claim. Properly signed promissory notes and guarantees are precisely what can make collection possible at this stage.

At Flamingo, security is part of the property management process from day one—not a document forgotten in a drawer:

• Establishing a mix of security that complies with the law and provides practical protection.
• Screening tenants and guarantors before signing.
• Tracking guarantee expiry dates and updating guarantees when leases are extended.
• Sending legally compliant notices and recovering the exact permitted amount, with support from the legal team we work with.
• Managing the timely return of the balance to the tenant to avoid unnecessary claims.

Has your tenant breached the lease, and you are unsure which security you can enforce? Leave your details on our legal support page, and we will help you assess the right next step before it becomes a problem.

The information in this article is general and does not constitute legal advice. Every case is different, and you should consult a lawyer before taking action.