Maintenance reserves and security deposits
Restricted cash held for the lessee.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: maintenance reserves and security deposits.Updated 4 November 2026
Part of project finance and infrastructure models, with the models, labs and guides around it.
What it does
Cash a lessor holds for its lessee, kept apart from its own. Maintenance reserves are paid monthly so that the money for heavy checks, engine shop visits and landing gear overhauls is there when they fall due; the lessor reimburses that work from the balance and pays anything above it itself. Until the lease ends the balance is restricted cash matched by a liability, never revenue. What is left at lease end is released to maintenance revenue. A security deposit is returned at lease end or kept on a default, and both pass to the buyer when the asset is sold with its lease. Leases without reserves use end-of-lease compensation for the return condition instead.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, rows 44–48: Maintenance reserves paid by the lessee, Reserve balance taken over at close, Major maintenance event, year, Reimbursement claimed for the event…
- Maintenance, rows 6–14: Taken over from the seller at close, Received, current lease, Received, second lease, Claim for the major maintenance event…
- Maintenance, rows 17–21: Received, Returned at lease end, Kept on a default, Passed to the buyer at the sale…
- Maintenance, rows 24–32: Taken over from the seller at close, Received, current lease, Received, second lease, Claim for the major maintenance event…
- Maintenance, rows 35–39: Received, Returned at lease end, Kept on a default, Passed to the buyer at the sale…
- Maintenance, rows 42–50: Taken over from the seller at close, Received, current lease, Received, second lease, Claim for the major maintenance event…
- Maintenance, rows 53–57: Received, Returned at lease end, Kept on a default, Passed to the buyer at the sale…
- Maintenance, rows 60–71: Reserves received and taken over, Reimbursed to lessees, Lessor contributions above the reserve, Maintenance revenue: reserves released at lease end…
- One Lease, rows 12–15: Maintenance reserves received, Reserves reimbursed for the shop visit, Reserves released to revenue when the lease ends, Maintenance reserve liability at the year end
What a reviewer looks for
- Reserves counted as rent or as cash available for debt service.
- Reimbursements that can exceed the balance held, with no lessor contribution.
- A balance released before the lease it belongs to has ended.
Learn it, then build it
Vocabulary: Operating Lease.