Holding deposit - is it refundable?

Question

Hi All,

I'm considering signing a lease for an apartment in Philly, and I'm concerned I may be getting taken advantage of. First off, I made the mistake of giving the landlord a "holding deposit" before having a chance to thoroughly review the lease. Now that I've had more time to read it, I've noticed some things in the lease I'd like to have amended before signing.

The thing is, I'm worried they'll refuse to change the lease and try to keep my holding deposit.

What recourse do I have? Is the holding deposit refundable? It was never stated in writing and now I'm afraid to ask in case the vagueness of the agreement is beneficial to me. Any guidance would be greatly appreciated.

Thanks,

Davis

Deanna McCormick · Answer

@Davis Hermann exactly you say just that you want a copy of the lease, that you are concerned and want further explanation of like paragraph 7.. or whatever your not familar with or uncertain about in terms..

I think it's friendlier to call and ask when you can come in a sit down and go over the lease. and take that list with you. If the person your meeting with isn't the owner, but is a manager then they may not have authority to make any changes to lease without contacting their owner or manager.. so be patient and hopefully all will go OK.

Just don't sign it unless you understand it. Like I said ask for copy of unsigned lease to take home and read over, another 24 hours isn't going to make or break the timing of the apartment they can't show it to anyone else unless you say your not taking it.

Ask for a copy of the holding deposit paperwork if you don't have it already it should include terms of what it is on that.

Jennifer T. · Answer

My holding deposits are non-refundable, though I do specify that (in writing) with the receipt I give the potential tenant.  Although I'm not from PA, I usually think of any kind of deposit as being non-refundable, unless there is something in writing that states it otherwise.

I can't say if 5% is too much.  3-4% seems like a national average.  But, even in my own city, there are some parts of the city where rent goes up 0-3%/year.  And other parts where rent going up 10%+/year isn't unusual.

If I were you, I'd talk to the landlord about changing the lease to a shorter notice time if you don't want to renew the lease for another year.  Like 60-90 days, instead of 6 months.  I've occasionally had tenants request a small change in a lease term.  Both times I've been amenable with the change and did so.

However, if the LL doesn't want to change the lease, you can ask for your holding deposit back.  If he/she won't return it, then I'd probably just sign the lease the way it is.  And perhaps give notice in 6 months that I will not be staying past the one year!

Jaz Sweets · Answer

I get why the money is taken to hold an apartment that someone intends on renting.  But I paid 450 online when I applied for an apartment.  50 application fee and 400 "administrative fee" which would be part of the deposit had I been approved and signed a lease. However I was denied in less than 24 hours and then told by the apartments that I had to wait two to four weeks for a check to arrive in the mail even though it took them 4 minutes to take it out of my bank account. No I can't even go apply for other places because I don't have thousands upon thousands of dollars to be applying for places. Isn't there something that protects me from this sorry I jumped in on your forum

Davis Hermann · Answer

Hi Deanna,

Thank you very much for your thoughtful response - I appreciate it.

Generally speaking, what's the best way to approach the Landlord about questions I might have or changes I might request? Do I set up an in-person meeting and go over it with them? Do I send them a list of my questions / concerns?

My fear is that the Landlord will be unwilling to negotiate as they already have my holding deposit. I want them to know I'm very serious about the apartment, but that I want to be sure I understand the lease and that it is fair.

Thanks again,

Davis

Deanna McCormick · Answer

The holding deposit once you are approved for the apartment and sign the lease transfers over and becomes the security/damage deposit.  If for any reason you decide not to accept the apartment prior to signing the lease the holding deposit then becomes non-refundable along with the cost of the application fees charged to run your credit.

It's better to forfeit a holding deposit and be out that money than sign a lease for something that's not going to work for you.  If the landlord is kind he may agree to partial refund if he's able to rerent for same move in period.

The reason behind forfeiting the holding fee is the landlord took the apartment off the market and held it all in favor of you signing the lease, and you decided against it,  once a lease is signed you have a contract and are legally responsible for moving in and paying on that lease. If you fail to move in and don't pay the landlord can not rent until he take eviction action for non-payment of rent or makes arrangement with you to pay a cancellation fee.

Don't ever sign a lease unless you fully intend to move in and live there, it's not a well I changed my mind type of transaction. It's a legally binding contract.

If you don't understand a lease, ask to take a copy of the lease with you,, not signed and say you want your lawyer friend to explain it and go over it prior to you signing. Nothing wrong with that and fully within your rights to read and look over the terms completely, along with and addendums, and ask if any addendums are part of the lease. Could be policy packet which can get pretty picky about all kinds of things permitted on property and use conditions.

Laticia Braxton · Answer

I agree with Jennifer and say just ask for the change.  Six months is not normal for a residential lease in Maryland, but it does sometimes show up in commercial leases.  I've actually managed commercial property for an owner who had that exact clause in all of his leases and found great joy in "getting" tenants who failed to remember their timelines for non-renewal (so glad he's out of my life LOL).   The landlord should be amenable to a 60 or 90-day notice and realize that having a great tenant relationship at the genesis is worth way more than the six month notice he/she is requesting.

Now you know going forward to read the lease thoroughly before handing over any money. I really hope it works out for you!

Jennifer T. · Answer

Well, that would be a small change to me, lol.  But then I don't make my tenants give me 6 month's notice in the first place!  It might be a no-go for your soon-to-be LL, but I don't think it's unreasonable to at least ask.

Davis Hermann · Answer

Hi Jennifer,

Thanks for the information. It's good to know the renewal time is a small change, and one that the LL might be willing to make! It may not be a big thing for them, but three extra months would be enormously helpful for me.

Best,

Davis

Davis Hermann · Answer

Hey Cody,

Thanks for your input. I love the place, and I'm very serious about renting it, I just don't like that they seem to have all the power in the lease discussion. And yes, I'm happy to talk about what I don't like about it.

My primary concern is the 'lease renewal' clause, below:

55. Lease RenewalThe Lease will automatically renew for an additional year if written notice is not provided by the Tenant of the Landlord within six (6) months. The Lease will renew at the current rental rate plus 5%.

1. Is it normal to automatically renew after only six months? This is a year lease. That seems REALLY early to me. I was anticipating having to make that decision at something like 9 months.2. The lease states that the renewed lease will be at the current rental rate plus 5%. Is that typical? After poking around online a bit, it seems like 3-4% is about average.

Thanks,

Davis

Holding deposit - is it refundable?

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