Security deposit

6 Replies

Hi,

I'm about to rent a house fully furnished to an out of state renter, we agreed on the price and they're qualified, the only problem is that there's a small chance that the company they work for will not assign them to Michigan, they said in 2 weeks they will let me know for sure but they want to me to hold the property for them, so I told them that in order to hold the property I need a security deposit and in the case that they don't get assigned I will keep 1/3 of the deposit and it's up to me if I want to return the 1/3, if I feel that I didn't lose any business, I have no problems returning the entire amount to them but with the demand right now (this week I started getting requests to view the property left and right!) that might not be the case. 

So how should I go about doing this? Let me know if I'm doing this correctly:

1.- I need to send her a document with the rules about the deposit to hold the property and pointing out that if they don't move in I keep 1/3

    * they sign, send document back, I sign and send a copy back to them with both signatures.

2.- they need to send asap a cashier's check (or should I require a wire?) so I can actually hold the property.

    * Once I get the cashier's check (or wire), I send them a signed document that I received the deposit.

3.- Once they arrive in town we sign the lease and the hold deposit becomes the lease deposit.

Am I doing this correctly?

Thanks,

Roy.

I would just have them give the security deposit and the first month of rent. They will have to begin renting now for you to "hold" it.  If they find out they will not be staying, then keep the prorated amount of rents and give back the security deposit.  That's what I would do.

@Roy Gutierrez  

I would tell them you are going to show it to other people and if its still available when they find out about the job then you will proceed. Find someone prepared to make a decision.

You're on the right track but I'd personally do it a little bit differently. One, I would definitely stay away from using the word " deposit". You should make sure the document states its a holding "fee".

I would also stay away from "I get to decide if I keep $xxx.xx". You will both sign the holding fee document so both parties agree that you WILL keep $xxx.xx if they don't follow thru with the lease. 

Last, and some may disagree, I would only ask for a hold amount equal to the amount of days they're asking for you to hold it. If your prorate amount is $33.33/day and they want  you to hold it for 15 days then just require a $500 holding fee. That way if they don't show you're completely done with them at that point. You don't have any money to return to them and they can't claim that you owe them anything.

Great points all you guys, thank you very much!

Well, this worries me.  

  • They are out of state, 
  • haven't seen the property, 
  • you haven't seen them, 
  • you haven't ran a credit check, or have you?  So you don't know if they qualify.
  • You don't have an application form filled out or do you?
  • You haven't screen them yet or have you?
  • Have they qualified?

I would never hold a home based on someone not seeing the place. Therefore I would tell them that if the home is available when they get to Michigan, you will be more than happy to show it to them.

Nancy Neville

Hello Roy,

I had a similar situation last summer- a fellow was looking for a place for he and his girlfriend to rent when they came back to MI- both working out of state for the summer so they had not seen the apartment.  He was familiar with the area and asked for contact info for others in the triplex to get their opinion on the house and our company.  I refused that, but sent my tenants an e mail explaining who he was and what he wanted, one of them contacted him and he decided to rent the unit.

He gave me an application fee for each of them and a $200 holding fee.  The holding fee put them first in line for the apartment- if they changed their minds I kept it, if I could not rent to them I would return it.  I ran his background check and called his references, his girlfriend had not sent an application.  I asked for the other application for a couple of days and he then told me that they had broken up and he could not afford the unit alone.  I returned only her app fee and  started calling the people on my wait list for the unit and I had a signed lease later that week.  This all took place about 6 weeks prior to the current tenant moving out, but in my area apartments are typically rented 1-6 months in advance or more.

Best of luck,

Kelly