Deposit for rental flats in Spain: lodging and reclaiming the fianza in the Balearics

Anyone renting out or renting a flat in Mallorca will almost inevitably come across the term fianza – the deposit. Unlike in Germany, this is not a matter of free agreement between the parties in Spain, but a legal obligation, whose amount, safekeeping and repayment are regulated in detail. In the Balearics there is an additional peculiarity that many landlords – especially foreign ones – are unaware of: the deposit must officially be lodged with a public authority. This guide clearly separates what applies between tenant and landlord (LAU Art. 36), what the landlord owes to the Balearic administration (Llei 5/2018), and where additional securities such as guarantees reach their legal limit. You will learn what happens if the deposit is not repaid, how deposits are adjusted in long-term tenancies, and which mistakes most often lead to disputes in practice.

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The statutory deposit under Spanish tenancy law (LAU Art. 36)

The basis for every residential tenancy in Spain is the Ley de Arrendamientos Urbanos (LAU), the urban tenancy law, consolidated in the BOE. Article 36 stipulates that a cash deposit must be provided when the contract is concluded – not as an option, but as a legal requirement of the tenancy.

Note: The amount of the statutory deposit is not negotiable. A landlord who, from the outset, demands more than one month's rent as a "deposit" for a normal residential tenancy is generally conflating the statutory fianza with an additional security – more on this below.

If you live on Mallorca permanently, you're generally covered by residential tenancy law with full tenant protection. You can find more on minimum contract terms, rent increases and further rights in our overview of Long-term rentals on Mallorca. Anyone renting only for a limited season, on the other hand, is often operating within the framework of the 11-month rental contract – different rules apply there, which are not the subject of this guide.

The Balearic peculiarity: deposit lodged with IBAVI

What surprises many German-speaking landlords: in the Balearics it is not enough to simply keep the deposit yourself as the landlord. Under the Llei 5/2018, de 19 de juny, de l'habitatge de les Illes Balears the deposit received must be lodged with a public body.

Please note: The most common confusion in forums and template rental contracts: the obligation to lodge the deposit with IBAVI is a public-law obligation of the landlord towards the administration – it does not replace your civil-law claim as a tenant to repayment under LAU Art. 36. Both levels run in parallel and must be considered separately.

Landlords who don't live on the island themselves often delegate the management of tenancies to a professional property management company, which also keeps an eye on the timely lodging of the deposit – a property management company in our directory usually handles this task as a matter of routine. Our guide on the legal background to Balearic housing regulation as a whole provides further information on the Ley Vivienda Balearen.

Additional security: guarantee, bank guarantee & the statutory cap

In addition to the statutory cash deposit, Art. 36.5 LAU allows the parties to agree on additional security – such as a guarantee, a bank guarantee or a deposit insurance policy. However, this additional security is not permitted without limit.

Note: If, for an ordinary residential tenancy, you are asked for "a deposit of three months' rent in cash" without any distinction being made between the statutory fianza and additional security, it is worth taking a close look at the contract. The cap under Art. 36.5 expressly concerns the additional security alongside the statutory cash deposit, not the cash deposit itself.

Repayment of the deposit and interest in the event of delay

The most important paragraph for tenants is Art. 36.4 LAU: if the deposit is not repaid at the end of the tenancy, it starts to accrue interest one month after the tenant returns the keys at the statutory interest rate, provided repayment has not been made by then.

• The statutory interest rate is reset annually – you should therefore not rely on a fixed percentage from older sources, but instead consult a professional or the official sources for the current figure.
• The law specifies no fixed repayment deadline such as "within one month". It only ties the obligation to pay interest to the expiry of that month – the repayment itself may in practice occur earlier or later, but becomes more expensive for the defaulting landlord from that point onward.
• The law does not provide an exhaustive list of which deductions (damages, outstanding utility costs) are permissible in individual cases – the deposit generally serves to secure the tenant's obligations under the contract.

Deposit adjustment upon contract renewal (5- or 7-year rule)

During the first five years of a tenancy agreement – or the first seven years if the landlord is a legal entity – the deposit remains unchanged. Only upon a renewal may it be adjusted:

1. Within the protection period (5 or 7 years): no update of the deposit, regardless of how the rent develops.
2. With each renewal thereafter: The landlord may demand an increase, the tenant a reduction – in each case until the deposit again corresponds exactly to one (residential use) or two (other use) months' rent at the then-current rate.
3. Additionally in the Balearics: The landlord must actively request the adjustment from the tenant so that the deposit lodged with the IBAVI is updated accordingly – the deposit office and the contracting parties must remain in sync here.

Note: Anyone who lets or rents across multiple renewal cycles should actively check the deposit amount at each contract renewal – in practice, this step is often simply forgotten.

How you, as a tenant, can check whether your deposit has been lodged

Since the obligation to lodge the deposit with the IBAVI rests exclusively with the landlord, you as a tenant initially have no direct proof of whether your landlord has actually fulfilled this obligation. However, this is precisely the most effective lever if a dispute over repayment arises later: tenants can have it checked whether their deposit is registered with the IBAVI. How this verification specifically proceeds in individual cases changes along with administrative processes – since 4 April 2022, the operational handling has been with CAFBAL, which is why it is worth checking the current channels of the Institut Balear de l'Habitatge (IBAVI) if needed, rather than relying on older instructions.

Overview of obligations: tenant vs. landlord

Most common mistakes with the deposit in Mallorca

• Confusing the deposit with the lodgement: Many people believe that once the deposit has been paid to the landlord, the matter is settled. The actual lodgement with the IBAVI is a second, separate step that only the landlord can and must carry out.
• Accepting additional security without a cap: If more than the legal framework of Art. 36.1 plus 36.5 is demanded "as security", it's worth having the contract legally reviewed before signing.
• Forgetting to adjust the deposit when the contract is extended: After the 5- or 7-year protection period expires, the deposit often remains unchanged even though the rent has long since increased – this can lead to additional claims or disputes for both sides.
• Mixing up holiday letting and long-term rental: The rules described here apply to residential tenancies under the LAU. Tourist letting with an ETV licence follows its own set of rules.
• Missing handover report: Without documented condition at move-in and move-out, resolving disputes over deductions from the deposit becomes much harder.

What to do if the deposit isn't repaid? What happens next?

1. Send a formal, verifiable reminder: Formally demand repayment and document the date the keys were handed over – the one-month period under Art. 36.4 runs from this point.
2. Clarify the lodgement status: Ask the IBAVI or CAFBAL whether the deposit was actually lodged at the time. A missing lodgement doesn't change your civil-law claim, but it is an additional bargaining tool against the landlord.
3. Let the deadline pass and assert interest claims: Once a month has passed without repayment, statutory interest automatically applies in favour of the tenant.
4. Seek legal advice: If the landlord persists in refusing, it is advisable to bring in a local law firm specialising in tenancy law, which can review the individual case – for example disputed deductions or the exact interest calculation.

For the reverse case – where the tenant fails to pay or does not move out on time – Spanish law provides for a separate judicial procedure; you can find an overview of this in our guide on Desahucio in Spanien. Questions relating to the ordinary termination of the tenancy agreement by tenant or landlord are covered in our guide Mietvertrag kündigen Spanien.

Checklist: Deposit at move-in and move-out

For utility costs that often arise together with the deposit issue (such as outstanding Comunidad payments or rubbish collection fees), it's worth taking a look at our guide on Nebenkosten bei der Mietwohnung in Spanien.

Conclusion

The deposit for rental contracts in the Balearics is not a matter for negotiation, but rather a two-tier legal system: between tenant and landlord, LAU Art. 36 regulates the amount, adjustment and interest payable in the event of default. In addition, the Balearic Llei 5/2018 obliges the landlord to deposit the deposit received with IBAVI – a public-law obligation that runs parallel to the tenant's civil-law claim and provides additional protection in the event of a dispute. Anyone who understands both levels and does not forget the adjustment when extending contracts avoids the most common conflicts surrounding the fianza.

Official sources

• Ley 29/1994, de 24 de noviembre, de Arrendamientos Urbanos (LAU), Art. 36 – consolidated version: https://www.boe.es/buscar/act.php?id=BOE-A-1994-26003
• Institut Balear de l'Habitatge (IBAVI), Govern de les Illes Balears: https://www.caib.es/webgoib/w/institut-balear-habitatge
• Llei 5/2018, de 19 de juny, de l'habitatge de les Illes Balears – Govern de les Illes Balears (caib.es)
• Col·legi Oficial d'Administradors de Finques de les Illes Balears (CAFBAL) – responsible for the administration of rental deposits in the Balearics since 4 April 2022