Qualified tenant changes her mind. Can I keep the move-in fee?

Question

Hey,

Here is a question related to move-in fees.   I had screened and approved a tenant for August 1st.  I notified the applicant of the approval, received the move-in fee, approved the application, and after I sent the Lease, this person backed out.  It took me one or two weeks to send the Lease, I acknowledge that.   However, the application was approved.

I don't want to be involved in  litigation over $450 dollars. However, I wish I could keep the deposit, because this person may cost me August's rent ($1,000) and a headache.

Here is how the application reads. This person signed it and paid the deposit. This person did not sign the lease.

What do you think?  Should I revise the wording below?

Thanks,

Amy Beth · Answer

@Frank Sanchez. I would just list the property again and do not take down the listing until you have both a signed lease and have collected the first months rent and security deposit. I would not hold your property with an approved application again. If the tenant wants it enough they will pay for it and sign the lease.

Andrea Townsley · Answer

I wouldn’t keep it. It says the lease must be executed within 10 days and you didn’t even send it to her. I personally would have followed up if I was the tenant and started asking for my money back if it wasn’t send.

I strongly dislike move-in fees or similar, unless they are applied to first month’s rent. The cost of turning a unit should be embedded in the rent amount.

I have sort of been in this spot where I applied and was approved and paid a $100 fee to hold the unit which would have come off the first month’s rent. We decided not to proceed after doing more research about the area and I completely understood that I would lose my $100 and the app fee we paid. But in your situation where the size of the fee is greater and you didn’t send the lease in a timely fashion, I would want my money back.

Also you said she cost you August, there are still 2+ weeks till August begins so you may still get a tenant in there.

I would chalk it up as a lesson to stay on top of sending docs to tenants and return her money, minus the app fee.

John Warren · Answer

@Frank Sanchez the reality is that Chicago is very tenant friendly. This tenant can find a free tenant's rights attorney with little trouble, and you would be in a world of hurt over $450. I would personally move on just on principle. If you didn't respond in a timely fashion in the middle of leasing season, the tenant probably felt pressured to find a place. Tenants are on tight timelines, and have to make quick decisions as there is a lot of competition in Chicago for nice apartments.

Chalk it up as a learning experience, and move on!

Frank S. · Answer

I'll return the fee.  This is a learning opportunity.

From here on,

If a tenant is interested,  I'll send them directly to MySmartMove.com. I won't bother doing pre-qualifications.

Then,  if I don't get both,  the lease and the deposit,  I will move on.

I stopped because this tenant was highly qualified. This is a new definition to what highly qualified means.

Thanks,

Frank

David Avetisyan · Answer

Per your application, you can hold the deposit. What the law that governs your county says, maybe be different.

I think waiting several weeks before sending the lease agreement opens you up to a lot of issues.

I would probably just return the monies and move on.

To your success!

Russell Brazil · Answer

Id say without the signed lease, No.

Steven Warner · Answer

Frank:

If they signed the application pictured, you can keep it as liquidated damages - it says it right in the application which is a contract itself to have the tenant sign a lease.

If they did not sign it then you need to break out the check book.

Now, even if they did sign it, they may still try to get it back and unless this is common for your area- some judge might give it back to them because it is "excessive".

You might want to ask other LLs in the area if this is common and allowed.

Next time get an application fee and tell them you will continue to show the property until a qualified tenant shows up with the first month's rent, last month's rent and security along with an application fee. If they want it bad enough they will be back.

Just my thoughts...

Steve

Account Closed · Answer

Is this a normal thing in your area?

What’s the move in fee for?

Sorry just never heard of it.

Typically we do a application fee then if they accept they have a few hours or until close of business to bring a money order For the entire amount of first last and security deposit. At which time the lease is signed.

Frank S. · Answer

Move in fees are popular in Chicago.  Holding a security deposit is a headache and a huge liability if not done properly.

Frank S. · Answer

All done.

I dropped rent and lowered the move-in fee to $375 to get more traffic. It worked.

New tenants are set for 8.15, 2 pm. Old tenants extended their stay until 8.15, 20 am. So, no turnover.

I reimbursed the "qualified tenant".

Frank

Qualified tenant changes her mind. Can I keep the move-in fee?

Most Popular Reply