Louisville, KY · Member since 2014 · 3 posts · 0 votes
I have a renter who paid a deposit, took possession of the keys and signed a 1year lease but now is talking about backing out and not moving in. Am I obligated to return their deposit?
Investor · Lafayette/Baton Rouge, LA · Member since 2013 · 1k+ posts · 915 votes
12y
@Sam Maradey How quickly can you rent the place to someone else? Yes, a lease is a contract that creates an obligation as detailed in the lease. I would look for a solution that allows you to give back at least a portion of the deposit after you recover any real losses.
You are in business and you should take your lease more seriously than buying a generic form off the shelf. You're going to need some advice from an attorney before you do anything in this situation. I would also ask for a good lease that is written for your particular state while you're talking to that attorney.
SFR Investor · Dallas, TX · Member since 2011 · 604 posts · 243 votes
12y
Sam, what does your lease say,, normally it would be a loss of the deposit (or try to hold them to the full year), but it really depends on what your lease says
Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
12y
Sam, if you search the forum posts for nonrefundable deposit or similar keywords, you'll find some really good posts about ways to handle this, at least for the next time you take an initial deposit. This binder agreement is an example:
But, basically, treat the initial deposit as a fee to hold the property, then convert it to the security deposit when they take possession. It also depends on your state's laws regarding security deposits, so you might be refunding it this time depending on the agreement you had with them.
Investor · Lafayette/Baton Rouge, LA · Member since 2013 · 1k+ posts · 915 votes
12y
@Sam Maradey How quickly can you rent the place to someone else? Yes, a lease is a contract that creates an obligation as detailed in the lease. I would look for a solution that allows you to give back at least a portion of the deposit after you recover any real losses.
You are in business and you should take your lease more seriously than buying a generic form off the shelf. You're going to need some advice from an attorney before you do anything in this situation. I would also ask for a good lease that is written for your particular state while you're talking to that attorney.
Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
12y
I have a similar situation. Lady wanted my house and we took application and approved her in Nov/Dec. But she didn't want to move in until Jan 1. I told her to pay the deposit to my property manager and I would hold it until then. She asked for keys to move in some small stuff ahead of time. I told her no, not until she paid the full first-months rent. Well, here it is the 5th and we still don't have the rent (and she doesn't have keys yet either). If she backs out or doesn't pay the rent soon, I will cancel the lease and keep her deposit as my expense for holding the house for her.
SFR Investor · Spring , TX · Member since 2011 · 14 posts · 5 votes
12y
I had a similar situation a few years ago, they gave the deposit and signed the lease then changed their mind and wanted the deposit back. I went to an attorney and paid 75. dollars for half an hour, he charged 150. an hour anyway he read the property code to me that pertained to security deposits and it said that security deposits are only for damage done beyond normal wear and tear so basicly I paid him 75 dollars to tell me that I had to give it back. I have considered paying someone to wright me up a lease that says I can keep a certain percent of the security deposit because that is the way apartments do it around here. but now I use a property manager and they use the standard TREC form that is what I used when I had the problem but so far with them doing it I havn't had any problems. Like others said it depends on what your lease says.
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
12y
Normally if they sign the lease and take the keys they have taken possession even if they don't occupy. Did you get first months rent? If so from a rental standpoint you should be able to charge them rent until you can rent to someone else.
Is this a house/apartment or a room/shared rental? If a room rental you might want to negotiate and think about changing the locks.
@Bryan L. weird if you were around here I might think it was the snow but do you send a pay or quit if they never paid rent in the first place?
Louisville, KY · Member since 2014 · 3 posts · 0 votes
12y
This is the first time in renting a property to someone I don't know and it was a last minute rental so I bought a commercial lease at Office Depot. It's not even a residential lease so I'm not sure but I've definitely learned my lesson and loaded a residential agreement from lawdepot.com and it looks much better for the next time. I'm just trying to figure out what to do to get out of the lease without losing the deposit and having to pay another month's rent without a renter.
On all situations like this, their funds given to hold the home are considered as a reservation fee / holding fee. I have them sign an agreement that if they fail to perform or change their mind, they're out their money.
If they do perform and move in, etc, the fee is converted to their security deposit.
Also, on the lease, I'd really suggest finding a local landlord and ask them for their lease. Buy them lunch, etc. IMO, you're playing with fire with formatted leases, as you have experienced.
Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
12y
Sam, I agree with @Robert Leonard advice.
Regardless of the outcome of this situation, you will no doubt be well advised in future to take an active role in selecting the documents with the terms bested drafted to protect you. Also, you'd do well to invest some time to understand the implications of each clause by reading them carefully and perhaps doing so in the company a seasoned, no-nonsense landlord as your guide.
My experience with $150/hr attorneys is that it's like getting your car painted by Earl Shieb, who's motto is: "You can pay more and you wish you had!"
I first learned about title by not understanding the difference between and profile and a prelim. I learned about probate when an attorney asked me a question that I could not answer. While I still have rentals, I learned to prefer notes over rentals when a tenant filed four consecutive BK's to stall an eviction.
One way or another, you're going to get an education. The question is, will it be on your terms or your tenants?