Investor · Oak Park, MI · Member since 2014 · 299 posts · 47 votes
Well I have this issue, my house is 90% completed (I completely rehabbed it and looking good if I may say so!), it should be finished this weekend, new appliances coming in, touch up paint, install new counters, and ready to move, I picked a group of 3 guys (2 lawyers), I was asking for first,last, 1.5 security deposit but they said first and security deposit and I gave in b/c their references panned out.
Well, I told them lets get together and sign the lease and give me the deposit so I can hold the property. They came back with:
"We will give you the 1.5 months security deposit and 1st months rent on May 1 when the house becomes move in ready and we receive the keys."
I definitely see their point that they're covering themselves for not getting an unfinished house, but I can't risk losing a month if they don't move in, I feel like going to the people that came at #2,
Lease signing is taking possession. We both sign the lease. They hand over the agreed upon amount (minimum of one full month's rent plus security deposit) in cash or money order and I hand over the keys.
In holding situations we sign an agreement to hold the house until the lease signing/move in day. They give me a nonrefundable deposit to hold the place equal to the security deposit. If they sign on the agree-to date, it becomes their deposit. If not, I keep it and resume marketing the house.
In your case, though, the place isn't ready. So, I wouldn't demand any cash at this point. I would tell them they're at the top of the list and I will call them as soon as its ready. Assuming that's Monday, I would call them on Monday and ask that they either do an agreement to hold that day or actually sign the lease. My preference is always to sign a lease and hand over the keys a few days early rather than have the place empty. I would tell them (now) that I will continue to market the place and take applications. If I get another qualified applicant who is willing to put down a hold deposit right away I would offer them the opportunity to put down a deposit. If they don't, I'll lease it to the other applicant. I wouldn't be too demanding, though, until it was really ready. That last 10% can take longer than you expect.
I would at least get a deposit check for a signed lease agreement. You don't want to be in a position where the tenant is in the property without knowing the check will clear.
Maybe it's just me but this would not give me any good vibes. Sounds to me like they may well end up nit-picking all legal nooks and crannies with you throughout their stay. Some people never rent to lawyers on principle. I don't think they are a protected class, are they? :-)
If you have a truly strong #2 and still have the option to swap them out, I would. Life is short...
Pick door #2! Why would you hold this property for them for FREE? I collect and cash deposit checks at lease signing. These guys sound like lawyer pains in the ***. If the property is not ready their solution should be stated in the lease.
It's a cash for keys deal. In this particular situation I'd tell them to put down a deposit via cashier's check or money order to reserve the house then collect the remaining balance on lease signing day. If they object, tell them good luck and go with number 2.
Lease signing is taking possession. We both sign the lease. They hand over the agreed upon amount (minimum of one full month's rent plus security deposit) in cash or money order and I hand over the keys.
In holding situations we sign an agreement to hold the house until the lease signing/move in day. They give me a nonrefundable deposit to hold the place equal to the security deposit. If they sign on the agree-to date, it becomes their deposit. If not, I keep it and resume marketing the house.
In your case, though, the place isn't ready. So, I wouldn't demand any cash at this point. I would tell them they're at the top of the list and I will call them as soon as its ready. Assuming that's Monday, I would call them on Monday and ask that they either do an agreement to hold that day or actually sign the lease. My preference is always to sign a lease and hand over the keys a few days early rather than have the place empty. I would tell them (now) that I will continue to market the place and take applications. If I get another qualified applicant who is willing to put down a hold deposit right away I would offer them the opportunity to put down a deposit. If they don't, I'll lease it to the other applicant. I wouldn't be too demanding, though, until it was really ready. That last 10% can take longer than you expect.
I'd say that's fine but I'll continue to market the property and reserve the right to select another tenant. No deposit means no holding the property. If it's still available when they're willing to put down the deposit then I'd give it to them, if not then they're out of luck for not locking it up with a deposit.
Keep advertising it, If you get another renter that is better run with it. If not meet them on the move in ready day. No checks, money orders only. If they say know to that then Red Flag again. First flag was Lawyers. lol
Lawyers as tenants? More than one lawyer? For reals?
They have a point about the last month's rent. Are you sure you can collect last month's rent in advance in MI? Where I am that has to be part of the security deposit. So I can collect 2.5 times the rent for security but I can't call it last months rent (even though some tenants and landlords do allow it to used up during the last month).
You may want to reconsider your tenant choice. Unless you're a legal eagle and can keep them in check, two lawyers could really make your land lording life hell. Seriously.
If you have another qualified applicant that is willing to put up the deposit I would go with them. What is their backup plan if the place isn't ready on the 1st? I could see them insisting on some provision that you will put them up at an agreed to hotel and pay for any storage needed until they can move in but not reasonable to say they will give you the funds that day.
I get all monies owed at the lease signing. If they don't have ALL of it they can get it to me sometime in between then and move in. If they want to pay by personal check they have to get it in soon enough that it clears prior to move in, so minimum of a week and I tell them that I'll hold the keys until it does clear. No effing way I am giving up possession until I have cash in hand.
In my opinion MOST of the time if you have someone that will not pay or bounce a check they are a pro tenant and will drag things out as far as possible. In my state that means 4-6 months minimum so I want to have all the cash I can to start.
I'd say that's fine but I'll continue to market the property and reserve the right to select another tenant. No deposit means no holding the property. If it's still available when they're willing to put down the deposit then I'd give it to them, if not then they're out of luck for not locking it up with a deposit.
That's what I would do too. I'm feeling for the OP because you have to be really, really firm with tenants that push their way on you. And you have to know you are being pushed and act rationally and fast. Lots of nice people make terrible landlords because they don't see the manipulation coming.
I would look for another tenant. From my experience, you want to be the one calling the shots. If you have a tenant that has the upper hand over you in the relationship, it can make your life difficult down the road.
In this situation, they want you to hold the house for them, but they are free to go find something else and stiff you. I always say, "I will continue to show the house until I have a deposit in hand. If you would like to lock this one up, then I will need the deposit." If they don't want to play by your rules now, they are probably going to try to steamroll you in other situations in the future.
At this point I don't even want to give them the option of giving me the money, I will talk to #2 and see if they're still interested, if they're not anymore then I will say that I will give them the option.
I agree with most of the advice above. They have already bullied you into not paying the last month's rent that you required (I've had this happen too). Since they are lawyers, they will nitpick everything and be problem tenants. I would go with door #2.
Well I have this issue, my house is 90% completed (I completely rehabbed it and looking good if I may say so!), it should be finished this weekend, new appliances coming in, touch up paint, install new counters, and ready to move, I picked a group of 3 guys (2 lawyers), I was asking for first,last, 1.5 security deposit but they said first and security deposit and I gave in b/c their references panned out.
Well, I told them lets get together and sign the lease and give me the deposit so I can hold the property. They came back with:
"We will give you the 1.5 months security deposit and 1st months rent on May 1 when the house becomes move in ready and we receive the keys."
I definitely see their point that they're covering themselves for not getting an unfinished house, but I can't risk losing a month if they don't move in, I feel like going to the people that came at #2,
Landlords are scared to rent to lawyers because will they will go through the lease with a fine tooth comb where a uneducated tenant will accept what the landlord throw at them.