A deposit guarantee is an agreement in which a third party provides financial security for an agreed amount on the tenant’s behalf. The landlord gets security for the tenancy, and the tenant avoids placing the full deposit in a blocked account.
The guarantee moves the liquidity, not the responsibility. The tenant remains responsible for unpaid rent, damage beyond normal wear and tear, and other valid claims under the tenancy agreement.
The landlord decides which form of security is required, and a guarantee can be used when both parties agree to it.
In short:
- A third party provides the security, and the tenant pays for the guarantee.
- The amount covered is agreed and set out in the guarantee document.
- If there is a claim at move-out, the tenant pays it to the landlord, or agrees a payment plan.
- If the tenant does not pay, the provider pays the landlord and the claim follows the tenant.
- The amount paid for the guarantee is normally not returned.
- The guarantee is terminated when the landlord notifies the provider.
- Deposit and guarantee combined cannot exceed six months’ rent.
What is a deposit guarantee?
A cash deposit is the tenant’s own money, placed in a blocked account in the tenant’s name. A guarantee is something different: a promise from a third party to cover the landlord’s approved claims up to an agreed amount.
Husleietvistutvalget describes a guarantee as a promise from someone other than the tenant, for example an insurance company or NAV, standing as security for the landlord’s claims under the tenancy agreement.
Norwegian tenancy law allows the parties to agree on a guarantee instead of a deposit. Deposit and guarantee combined cannot exceed six months’ rent.
How a deposit guarantee works, step by step
The guarantee follows the tenancy from agreement to end. With most providers it runs like this:
- The landlord and the tenant agree that the security will be provided as a guarantee, and on the amount it should cover.
- The tenant applies to the provider, which assesses the application.
- If the application is approved, the tenant pays for the guarantee and the provider issues it to the landlord.
- The amount and the terms are described in the tenancy agreement, so both parties start from the same understanding.
- The tenant pays for the guarantee throughout the tenancy.
- At move-out a settlement is drawn up. If there are no claims, the guarantee is terminated.
- If there is a claim, the tenant pays it, or agrees a payment plan.
- If the tenant does not pay, the provider pays the landlord and the claim follows the tenant.
The order of those last three points is the part worth noticing. A guarantee does not mean somebody else picks up the bill for you. It means the landlord has security while you pay what you actually owe.
What does it take to be approved?
The provider assesses the applicant before the guarantee is issued, because the provider carries the risk.
With Keyhole it starts with an invitation from your landlord. You then download the app and work through the application, which takes around ten minutes. You need:
- The invitation link from your landlord
- A passport or other valid identification
- BankID
- A payment card
Along the way you confirm your email and phone number, scan your identification, authenticate with BankID, and approve a credit check.
Keyhole looks at what you have left after fixed costs, meaning your income set against rent, loans, insurance and other regular costs. Debt and credit information are assessed as well. Income is verified by Keyhole analysing your bank transactions to get an overview of your finances.
If the amount you are left with is too low, approval can be difficult. Keyhole points to two routes from there: finding a co-signer, or working on your finances over time by increasing income, reducing expenses or paying down debt. You can also contact a financial adviser or a debt counsellor.
The article on approval and credit assessment goes further into what is assessed and what rights you have along the way.
What does a deposit guarantee cover?
The guarantee covers claims connected to the tenancy, up to the agreed amount. Typical examples are:
- Unpaid rent
- Damage beyond normal wear and tear
- Other valid claims under the tenancy agreement
What is actually covered varies between providers. The guarantee document and its terms are what govern a given tenancy, and both parties should read them before the tenancy agreement is signed.
Four points are worth checking in particular: the amount, which claims are covered, how and when the guarantee is closed, and what deadline the landlord has for submitting a claim.
What does it cost, and how is it paid?
The tenant pays for the guarantee. With Keyhole this is a monthly payment for as long as you rent the home.
The payment stops when the tenancy has ended and the landlord has notified Keyhole. That is worth noting: it is the landlord’s notification that stops it, not the day you move out.
The amount depends on the rent, how much security is agreed and the provider’s terms. Ask your landlord or Keyhole what applies to your tenancy.
What you pay for the guarantee is not returned. It is the payment for the service, in the same way an insurance premium is not paid back because you had no accident.
In return, your savings stay available throughout the tenancy.
Can you change your mind?
Yes, and there are two situations worth knowing about.
You have a fourteen-day right of withdrawal for as long as the obligations have not taken effect.
Later you can end the guarantee and replace it with a cash deposit. The same applies if the provider raises the monthly payment. In both cases what you have already paid is not returned, and a switch requires the landlord to be on board.
What happens at move-out?
This is the part most people wonder about, and it is worth reading before you sign rather than after.
After move-out a settlement is drawn up between you and the landlord. With Keyhole you receive it in the app, and it can take up to a couple of months after you move out.
If there are no claims, the landlord notifies Keyhole and the guarantee is terminated.
If there is a claim, you have two routes:
- Pay the full amount directly to the landlord.
- Agree a payment plan. The monthly payment then continues until the claim is settled, and a fee applies for setting the plan up.
If you do not pay the claim, Keyhole pays it to the landlord under the agreement. The claim does not disappear: it follows you, and you become liable for the collection costs and fees that come on top.
If you do not respond at all, the case can go to debt collection, with the costs and interest that brings.
What if you disagree with the claim?
Then there is a clear path, and it is one to follow in writing.
- Go through the settlement carefully and compare it with the handover protocol from move-in.
- Tell the landlord, and file an objection under the claim in the Keyhole app, explaining clearly what you disagree with.
- Attach documentation, for example photographs and earlier correspondence, and keep a good and professional tone.
- If you cannot agree, the case can be referred to Husleietvistutvalget.
- If you disagree with that decision, you can bring the case before the District Court (tingrett) within one month after the decision was served on you.
A judgment from the District Court can as a rule be appealed to the Court of Appeal (lagmannsrett).
If your objection is accepted and the settlement is changed, the amount is updated and payment is initiated based on the revised settlement.
One thing is worth planning for: the monthly payment to Keyhole continues for as long as the case is being processed.
When there are several of you on the guarantee
If you rent together, you are normally jointly liable.
That means everyone listed on the guarantee is responsible for the same debt, whether it concerns the monthly payment, fees or the final settlement.
If one of you does not pay, the others have to cover the full amount. If you cannot, the case may be sent to collections, and that affects everyone on the guarantee.
Talk this through before you sign, and agree how you will handle it if someone moves out early.
How is the guarantee closed?
The guarantee is closed by the landlord.
Once the tenancy is over and the settlement is done with no claims against you, the landlord notifies Keyhole and the guarantee is terminated.
This is worth following up yourself. If you move out and the landlord forgets to notify, the monthly payment carries on. Send a friendly reminder once the settlement is done.
Who actually issues the guarantee?
Keyhole is not an insurance company. The guarantee is issued through Nordic Guarantee, and Keyhole is registered as an insurance agency supervised by the Danish Finanstilsynet.
The deposit guarantee itself is not insurance for the tenant. It is security for the landlord.
If Keyhole were to cease to exist, that would not affect the security the landlord and tenant have, because the guarantee is technically issued by Nordic Guarantee.
What should the landlord look for in a guarantee?
For the landlord, the question is whether the document gives the tenancy the security it needs. Go through these points before accepting a guarantee:
- Who provides the guarantee, and who stands behind the provider
- What amount the guarantee covers
- Which claims are covered
- How and when the guarantee is closed
- What deadline applies for submitting a claim
- How a claim is submitted, and what documentation is required
- What happens if the tenancy is extended
The chosen form of security should be described clearly in the tenancy agreement. If the parties choose a cash deposit instead, the money must be held in a lawful, blocked deposit account in the tenant’s name.
Remember too that it is you as landlord who notifies when the tenancy is over. Do it as soon as the settlement is done, so the tenant does not pay for longer than necessary.
Deposit guarantee or cash deposit?
Both give the landlord security, and the difference is where the money sits.
With a cash deposit, the tenant’s own money is held in a blocked account in the tenant’s name, and whatever is not used is returned when the tenancy ends. With a guarantee, a third party provides the security and the tenant pays for the service.
The amount is agreed between the parties, and deposit and guarantee combined cannot exceed six months’ rent.
A full comparison, with considerations for both parties, is in the article on deposit account or deposit guarantee.
Frequently asked questions
Is a deposit guarantee the same as a deposit?
No. A deposit is the tenant’s own money in a blocked account. A guarantee is a promise from a third party to cover approved claims up to an agreed amount.
Does the guarantee mean I do not pay for damage?
No. If there is a claim, you are the one who pays it, either in full or through a payment plan. If you do not pay, the provider pays the landlord and the claim follows you, with the costs that come on top.
Do I get back what I pay for the guarantee?
No. It is the payment for the service.
When do I stop paying?
When the tenancy has ended and the landlord has notified the provider. Follow up with the landlord if the settlement is done and the payment is still running.
How long does the final settlement take?
It can take up to a couple of months after move-out.
Is Keyhole an insurance company?
No. Keyhole works with Nordic Guarantee, which is the insurance company behind the guarantee.
What happens if several of us are on the guarantee and one stops paying?
You are jointly liable, so the others have to cover the full amount. If it goes unpaid, the case can be sent to collections for everyone on the guarantee.
Can I delete my Keyhole account?
If you have never used the guarantee, you can delete the account whenever you like. If you have had a guarantee, the account can be closed 18 months after your last active payment and any final settlement.
Can the landlord require both a deposit and a guarantee?
Yes, they can be combined, but the total amount cannot exceed six months’ rent.
Is a deposit guarantee lawful in Norway?
Yes. Norwegian tenancy law allows the parties to agree on a guarantee instead of a deposit, within the same upper limit of six months’ rent.
Find the right deposit solution
Are you a tenant?
Ask your landlord whether a deposit guarantee can be used for your tenancy, and read the terms before you sign.
Are you a landlord?
Book a free, no-obligation call with Emma to see how you can offer both a deposit account and a deposit guarantee to your tenants.
Sources
- Tenancy Act § 3-5
- Tenancy Act § 3-6
- Husleietvistutvalget: Deposit and guarantee
- Keyhole help centre: Guarantee onboarding guide
- Keyhole help centre: Guarantee offboarding guide
- Keyhole help centre: Credit assessment
- Keyhole help centre: Joint liability
- Keyhole help centre: Help with dispute
- Keyhole help centre: Return policy
- Keyhole help centre: Keyhole FAQ
