New Investor; Tenant query.
Hi Fellow BP members,
I am a new investor and started renting for first time after purchase of my Duplex. I have a property manager. So one of the tenants saw property and we received one month security deposit to hold the unit (way back in mid Feb) and he was supposed to move on March 1st. He still hasn’t moved in because of some medical issues (as per him) and hospital admission etc etc and saying will move March 15th now. My question is ,Does the lease start March 15th and I get only half months rent for March or I should get full months rent since that was the agreed upon date. Also if he just postpones again, Can I keep or reduce the deposit money for rental loss?
My property manager is saying I have to return full deposit if I decide not to have this tenant (was supposed to move in March 1st, still haven’t moved in with first month rent ) or lease starts when he moves in. That does not seem right or fair. Not sure if that is true or she is just being indifferent to my business. And I have blocked or kept this unit because of security deposit since middle of Feb. Please advise, I want to start on the right foot.
#1 Legal & Legislation Contributor
- Rental Property Investor
- Hanover Twp, PA
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#1 Legal & Legislation Contributor
- Rental Property Investor
- Hanover Twp, PA
@Tsering Lhamo, ask your property manager to see the holding deposit agreement that they had the prospective tenant sign. That will tell you those answers.
If the property manager didn't have them sign a holding agreement then ask the PM why they didn't do that? If they don't have a good explanation then tell them they will need to make up for their error or file a claim against their errors & omissions insurance. Even if you can't get them to pay up, that may put them on notice that they need to get on the ball and handle these things correctly. There is no point in taking a holding deposit unless there are agreed upon terms about what that deposit is for exactly.
In many states a property manager needs to be licensed. If you hired an unlicensed one in one of those states then you are likely out of luck as you would expect to be when hiring someone to work illegally.
#5 General Real Estate Investing Contributor
- Investor
- Shelton, WA
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#5 General Real Estate Investing Contributor
- Investor
- Shelton, WA
I am not a fan of holding fees unless equal to rent and non refundable. We had a tenant three years ago who rented from us and never moved in. After 7 months she asked if we would be ok with early termination. We said sure and returned the security deposit minus a small cleaning fee. She was happy and we were happy,
@Tsering Lhamo Your PM should have been on this. Tenant puts deposit down for that date and there should be a holding agreement. If they don't sign the lease on the 1st they forfeit the deposit. If they wanted to keep the rental they should have made arrangements to pay the rent. My guess is the PM did not put that on the table. I would tell the PM that if the lease isn't signed on the 15th and rent paid you would like to terminate the tenancy because this could go on and on. A day or two I get but 2 weeks is a little much. I'm sorry you have health issues but we need to rent the unit, if you can't move forward by x date we will rent to another tenant (and whatever the hold deposit agreement says).
#1 Managing Your Property Contributor
- Property Manager
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#1 Managing Your Property Contributor
- Property Manager
- Metro Detroit
@Tsering Lhamo many PMCs haven't updated their processes to collecting Holding Fees - NOT deposits.
A deposit is refundable and very difficult to liquidate for damages.
A Holding Fee is a fee, so not refundable.
You need to understand what your PMC signed with the prospect. Hopefully, you can continue to show the property and get a better tenant to move in ASAP.
You would then need to refund the original prospect their deposit.
Lesson learned!
UGH! Anther incompetent manager. The fact that you have to ask this question demonstrates your PM isn't very skilled.
Your PM should have a policy that prevents this from happening. The collect a fee and hold the property for an expected move-in date. If the tenant can't move in on that date, they are still obligated to pay rent and abide by the terms of the lease. If they don't, they should forfeit the holding fee and the PM puts it back on the market for the next qualified renter.
Under no circumstances would I wait 11 days and still not have this figured out.
