Is Holding Deposit Necessary If Lease Is Signed?

Question

Hi all,

Tenant signed my lease today for move in August 1. Deposit and first month's rent is due before keys are handed over on 8/1. Since the lease was being signed I did not think to collect a holding deposit and am now having a few doubts. Is the signed lease binding before move in date and is it okay to take down the listing at this point?

Colleen F. · Answer

Account Closed  I have it that my lease is not valid if the deposit is not made.  You should have made them pay a deposit when they signed and made at least part of it non-refundable.  One option would be to contact them and ask when they are sending the deposit to make the lease binding as you want the check to clear ahead of keys. Your other option and probably a good thing to do now is to remind them you need the money in a cashier check to get the keys.

Are these people tight on money or did you just not ask? As for advertising I think you can leave it up and take inquiries until you get the money.

Nathan Gesner · Answer

I believe it is most important to get the deposit, whether that is a holding deposit or a security deposit. In fact, I require payment of the deposit in full within 24 hours or I do not take the property off the market and I will not hold it for the applicant.

if they are moving in within a few days, I just have them pay the security deposit and sign the lease. If we will be holding the property for more than a few days, then I prefer to use a holding deposit and holding agreement. I will have them sign the actual lease agreement a day or two prior to occupancy and then I convert the holding deposit to a security deposit.

Wayne Brooks · Answer

Account Closed Most landlords don’t sign the lease until tenant has provided first month’s rent (and last if required) plus the security deposit.  In your case the tenants can simply walk away, but you are bound to “wait and see”.

Account Closed · Answer

Thank you @Nathan G and @Theresa Harris for valuable advice. Still learning and the procedures you mentioned make perfect sense to me now.

Account Closed · Answer

Thank you @Colleen F. - No the people are not tight on money. I just had a concern whether someone could renege on a signed lease that kicks in within a few days - whether or not they have paid a holding deposit, and how that situation would unfold on the move in date. Either way I'll try and get a deposit to tie things down a little better.

@Chris Seveney - thanks for your response. The lease has no stipulation that they need to provide a deposit to validate the lease. Lease only states deposit and first month's rent must be paid before possession is granted and new lease term commences August 1.

Theresa Harris · Answer

Sometimes we learn from our mistakes.  As other said, take a deposit when they sign the lease and in the lease state that the deposit is non-refundable and will become their security deposit when they move in.  Also make sure you check they have the utilities in their name before handing over the key.

Chris Seveney · Answer

@Chris B.

If the terms of the lease stipulate they need to

Provide the deposit in order to validate the lease then that’s the answer

What do your leases say?

Is Holding Deposit Necessary If Lease Is Signed?

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