Lease Before Deposit

[Ashley Renders]

Hi everyone, 

I made a super rookie mistake and allowed a tenant to sign a lease before she sent the deposit. She said she would send the deposit later that day via e-transfer, so I sent her the lease to sign after checking her credit and calling her references. Now, she says she only has part of the deposit and wants to pay the rest at the end of the week. It seems like a bad sign. 

She has signed the lease, but we have not signed it as landlords. Are we allowed to entertain other offers? Or are we legally bound to rent her the house if she comes up with the deposit some time between now and her move-in date (Dec. 1). 

Lesson learned! Any advice would be appreciated. 

[Nathan Gesner]

@Mary M. you normally give good advice but in this case you are providing terrible advice!

1. Never, ever sign the lease before accepting the funds. Once they sign the contract, you are legally bound to rent to them even if they never pay you a dime. You will probably argue that they won't have the keys but what if they break in? You'll claim they haven't paid a dime but they'll show a legal contract and you'll have to go through the eviction process.

2. Deposits and first month's rent should be in full. Never accept payments. If they can't pay these first amounts in full then there's an increased chance they will struggle with paying rent in the future.

3. Deposits and first month's rent should be in certified funds. This means money orders, cashiers checks, or cash (if you accept it). You should never take a property off the market based on a payment that could bounce. If they pay with a personal check, it could be a week before it bounces and then you're stuck trying to get the funds from them or you've lost a week of marketing.

4. Why are you holding it until December 1? Are there tenants in the home until November 23rd? I don't hold units vacant for someone because that's essentially allowing them to rent the home for free and costing me money. My policy is to hold a home vacant for no more than one week. After that, they can start paying rent and utilities even if they don't intend to occupy for another month. Don't like it? They don't have to rent it and I'll keep it on the market for someone that wants it earlier. If I'm wrong and the home is still on the market a month later, they can rent it then.

5. You should NOT make part of the deposit refundable. Your policy should be in writing and should be clear: once they put the deposit down they are obligated to sign the lease and rent the property or they will forfeit the deposit.