Tenant Reservation fee

[Chue Quan]

Hi all,

If a tenant pays a reservation fee in preparation of moving forward and getting ready to sign the lease and move in, then he backs out. Who keeps this reservation fee? The Property manager or the landlord? I would think it should go to the landlord to compensate him for time wasted since the listing was taken down since the tenant said he wanted to move in. Please advise, property manager is saying that fee goes towards marketing fees and they will keep it.

[Nathan Gesner]

Quote from @Chue Quan:

Hi all,

If a tenant pays a reservation fee in preparation of moving forward and getting ready to sign the lease and move in, then he backs out. Who keeps this reservation fee? The Property manager or the landlord? I would think it should go to the landlord to compensate him for time wasted since the listing was taken down since the tenant said he wanted to move in. Please advise, property manager is saying that fee goes towards marketing fees and they will keep it.

 You should have a written Property Management Agreement that spells this out. Most states have laws requiring the Property Manager to disclose all their fees in advance and in writing. My Agreement says any funds forfeited prior to occupancy will be split 50/50 with the owner, to compensate me for the work done and to compensate owner for rent income lost. Other Property Managers keep it all, while others don't keep any.

Check your Agreement and make sure you understand what you signed up for. If you don't have a written agreement, find another Property Manager that is a professional.

[Drew Sygit]

@Chue Quan we agree with @Nathan Gesner as he nailed it.

Now the question is, what to do if it's NOT covered in your contract?

Many owners think shorter contracts are better, when situations like this often prove the opposite.