Tagatisraha

Tagatisraha is a monetary security provided by one party to another to guarantee performance of contractual obligations. It is most commonly used in rental agreements where a tenant pays a tagatisraha to the landlord to secure timely payment of rent and to cover potential damages; it also appears in commercial leases, construction contracts, and other service agreements, where it serves as collateral against breaches or non-performance.

Forms of tagatisraha include cash deposits held by the other party, bank guarantees or letters of credit issued by a bank, or escrow arrangements. The contract typically specifies how much is deposited, how long it is held, whether it earns interest, and under what conditions deductions may be made.

During the contract, the tagatisraha is held to secure compliance with obligations. At contract end, if there are no outstanding charges, the sum is refunded in full or in part; deductions may be made for unpaid rent, damages beyond normal wear and tear, or breach penalties, with a clear, itemized accounting. Interest may be paid to the depositor depending on jurisdiction and contract.

Legally, tagatisraha is governed by the contract and applicable tenancy or civil law. Rules vary by jurisdiction, including the permissible amount, the required holding method, timelines for return, and procedures for dispute resolution. In practice, good practice is to document the amount, the purpose, and the return conditions in writing, and to keep records of any use of the funds.