Caution deposits: how to collect and refund them properly
· LodgeDesk Team · 6 minutes
A caution deposit (sometimes called a caution fee or security deposit) is money a guest pays before their stay to cover possible damage, missing items or broken house rules. If nothing goes wrong, the guest gets it all back.
Handled well, caution deposits protect your property and build trust. Handled badly, they lead to arguments, bad reviews and guests who never return. Here is how to do it properly.
Why charge a caution deposit?
- It protects you against damage, missing items and extra cleaning.
- It discourages parties and guests breaking house rules.
- It gives you a simple way to recover costs without chasing the guest after they leave.
How much should it be?
There is no fixed amount. Owners usually set it based on:
- the value of the apartment and what is inside it
- the length of stay
- the type of guest and booking (a party booking carries more risk than a solo business traveller)
Some owners charge a flat amount for every booking, others charge the equivalent of one night's rate. Whatever you choose, keep it consistent and state it clearly before the guest pays, so it never feels like a surprise.
Put it in writing before the guest pays
Your invoice and house rules should state:
- the caution deposit amount
- that it is refundable
- what it can be used for (damage, missing items, extra cleaning, broken rules such as smoking indoors)
- how and when it will be refunded
Show the caution deposit as a separate line on the invoice, not mixed into the room charge. Guests trust a clear breakdown, and it makes refunds simple.
Collect it the right way
- Collect it before check-in or at check-in, before you hand over the keys.
- Confirm it has arrived in your bank app. Do not rely on a screenshot or SMS alert.
- Record it against the booking, so you know exactly how much to return.
At checkout: inspect fairly
Use the same checklist for every guest:
- Furniture, doors, windows and fittings undamaged
- TV, remote, AC remote, decoder and appliances present and working
- Keys and access cards returned
- No stains or burns on bedding, curtains or upholstery
- Kitchen items present and reasonably clean
- No signs of smoking or a party beyond what was agreed
If possible, inspect with the guest present. If you find damage, take clear photos with the date visible.
Refund promptly
Slow refunds are the biggest cause of complaints. Aim to refund within 24 to 48 hours of checkout, or the same day if everything is fine.
- Full refund: send it and tell the guest.
- Partial refund: explain each deduction in writing, with photos and the cost of repair or replacement. Deduct only the real cost, not a penalty.
- Damage costing more than the deposit: explain the shortfall with evidence and agree how it will be paid.
Record the refund
Record every refund against the original booking, with the amount, date and reference. This keeps your records matching your bank statement and gives you evidence if a guest later claims they were never refunded.
A short template message
Hello Amaka, thank you for staying with us. Your caution deposit of ₦50,000 has been refunded in full to your account today. Reference: 000013261114. We hope to host you again.
For a partial refund:
Hello Tunde, thank you for staying with us. During checkout we found a broken bedside lamp (photo attached). The replacement cost is ₦12,000, so we have refunded ₦38,000 of your ₦50,000 caution deposit today. Reference: 000013261115. Please let us know if you have any questions.
Keeping track with LodgeDesk
LodgeDesk shows the caution deposit as its own line on every invoice, records when it was paid, and lets you record the refund against the same booking. You can see at a glance which deposits are still waiting to be returned.
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