deposit to hold money

[Richard Plack]

 I am a new landlord and have a situation Im not sure how to handle .  I live in Ohio.  A lady from Texas was moving to the area, we showed her daughter and friend our property using facetime.  She wanted to lease it.  We ran a background check and everything came back great.  She wanted to pay us $900 for the first month rent and as a deposit to hold.  She sent money via pay pal.  I sent her an electronic lease to sign and took the house off the market.  I had two other qualified applicants I turned down.  Her daughter called us tonight and told us her mom decided to go with another home, which we she has the right to do as I didnt get a signed lease.  Do I need to return her full payment?  I know I made some mistakes with this transaction but I want to do the right thing by her and us. Lookimg for advice.  Thanks

[Nathan Gesner]

@Richard Plack I'm not familiar with Ohio laws or the court system so your mileage may vary.

My policy is pretty simple. I require the deposit in full before taking the property off the market. If the applicant fails to complete the leasing process, they forfeit the entire deposit. I make this clear, I state it in writing, and I don't negotiate so they better know what they're doing.

If you don't have this protection clause in writing, then my next recommendation would be to charge the tenant a prorated rent for the days of rent income lost. For example, if they agreed to rent it December 1st but are now changing their mind, put the property back on the market. If you find another tenant to rent it December 1st, refund the entire deposit. If you don't find another tenant until December 20th, keep 20 days of rent and refund the remainder.

A final note: always, always, always collect the deposit and first month's rent in "certified funds":

• Certified check
• cashier's check (known as a bank draft in Canada)
• money order (usually with proper identification)
• manager's check (usually with proper identification)
• EBT wire transfer (i.e. Western Union)

You shouldn't take the property off the market or let someone move in when there's the chance they can take the money back or their payment can bounce. Once you have the deposit and first month's rent secured, then it's safer to accept personal checks or other looser forms of payment.

By they way, PayPal is an awful option. Check out this article.