How To Handle Deposit Situation

Question

I have ( I should say had) a potential tenant she past the screening process says she doesn't want the apartment for another 30 days (July 1st) ok no problem I said I wanted a security deposit = (to 1 months rent) if you decide after the 30 days you still want the apartment I return your deposit and you are still due me 1st month and security deposit to begin lease agreement. if after the 30 days you decide you don't want the apartment you forfeit your deposit. and we move on ....is this fair?. keep in mind this happen on May 29th. the potential tenant did not agree what do you think?

Greg Moran · Answer

Yes, IMHO Fair. I also use 1-month's rent as a non-refundable deposit-to-hold, for no more than 30 days.  If the applicant successfully takes possession and ends up renting the apartment, then their deposit-to-hold becomes their security deposit.

Kenneth Garrett · Answer

@Ramon Copeland

I don’t hold properties in general.  If a tenant is going to move in within seven days I will require 1/2 months rent.  It is non-refundable.  If they want to hold it longer they must sign the lease and pay the rent and security deposit as if the lease started now.

Anthony Wick · Answer

@Ramon Copeland

To hold a rental unit, I require a signed lease and a security fee. The fee then turns into the damage deposit when they move in. If I hold the unit and they decide they don’t want to move in, they forfeit their fee. If somebody does not like that, or they cannot put a holding fee down, then we go our separate ways. Rent is due, and verified to have cleared my account, before I give them the keys.

Wesley W. · Answer

Absolutely do a contract to hold.  However, call it a "binder payment"; if you call it a "deposit", this implies you are holding it in escrow for the tenant, and it is theirs by right.

At the "contract to hold" meeting, I collect an amount equal to one month's rent. I ONLY accept cash or a check drawn on a local bank (so I can walk it in and get cash that same day). We sign an agreement that commits their non-refundable binder payment for a brief period (usually 5 days), during which time I call landlords, employers, and run background checks. If there is anything untoward, I have a 7 day right of rescission and I give the money back. I absorb the background check fee as it is a small price to pay for dodging the bullet.

Once background checks are complete, we meet again for a lease signing, at which point I collect the rest of the move-in fees. I only give them a short time (about 5 days) to meet for the lease signing before they lose their exclusive rights to the unit, so this prevents someone from dragging their feet after they've signed the contract to hold.

Once the lease is signed, I take down the ads and send out emails to people in mid-marketing flow letting them know that the apartment has been rented but I will reach out if something falls through.

DO NOT stop marketing and showing the apartment until you have a signed lease and all move-in fees are paid up and cleared (see above).

Ramon Copeland · Answer

Thank you all for the input

Kyle J. · Answer

I wouldn’t personally hold the unit for over a month for someone. I’d tell them they’re welcome to move in whenever they want but the lease/rent is starting on X date (no more than a couple weeks out).

Also, in my opinion, this applicant is stringing you along and isn’t serious. You need to move on.

Another thing I tell applicants, once they’re approved, is that I’m going to continue accepting applications and screening for tenants until I have a signed lease and all money that is owed (first months rent + deposit) is paid.

That motivates them to do those things quicker so you don’t run into these situations where you approve someone and then they just string you along while they (likely) keep looking for another place they like better and you have nothing legally binding holding them to your place.

Nathan Gesner · Answer

I require the deposit within 24 hours, paid in full and with certified funds so I know the money is good. I will hold the property for one week. After that, I expect them to start paying rent.

If they aren't moving for a month, they have the choice of paying early or waiting to see if the rental is still on the market when they're ready to pay. But I warn them that it's rare for a property to sit on the market that long.

I also have them sign a simple Holding Agreement that says we will hold the property until their move-in date. If they fail to sign the lease or occupy the property, they forfeit the Holding Deposit and we put it back on the market. If they occupy as agreed, then the Holding Deposit is converted to their Security Deposit and becomes refundable under the terms of the agreement.

Ramon Copeland · Answer

thank you all for you comments

How To Handle Deposit Situation

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