How to handle deposits at lease signing

Question

I've had the good fortune thus far to have tenants move in pretty quickly (within a week of lease signing).  But with my latest property I am experiencing what I think is more typical.....that a prospective tenant signs the lease and provides his previous landlord with 30 days notice.

The question is....what is typical as far as collecting deposits?  I've always done "at lease signing" but is it common practice to collect at move-in?  This seems like a risk (e.g. what is to stop the tenant from backing out of the lease and now I've held the property for a month).  Have you collected a small deposit just to have them put some "skin in the game"?  Curious on how others have handled this.

Deanna McCormick · Answer

You secure the deposit payment in full usually within 24 to 48 hours of notifying them they are approved. They also sign the lease at that time. You get the rent payment the day you give them the keys.

I would take nothing less than the full deposit, if you start taking payments then your renter is learning they can control you, if you do take payment on security deposit, I'd make sure you get a substantial amount and no checks, money order or cashiers check. Your security deposit agreement should state that if they fail to move in the security deposit is retained and is non-refundable.

Peter Tverdov · Answer

Do not give anyone keys without having first month of rent and security already paid for. It's that simple. I usually demand at least 50% of the security upon Lease signing (but that's only after asking for the full deposit).

Erin O'Connor Smith · Answer

@Michelle B. thank you! looking for a california approved version of this.

Erin O'Connor Smith · Answer

@Michelle B. can you please share that language?

Michelle B. · Answer

@Erin O'Connor Smith

I haven't done one in a long time and can't find the exact one that I used.  However, a quick google search found one that is good.  Here you go....

NON-REFUNDABLE HOLDING DEPOSITI, _________________,_____________________ received $__________representing thea non-refundable holding deposit for _______________Apt#___, Chicago, Illinois. Thisholding deposit shall be credited to tenant’s security deposit upon move-in. It will bedeposited into __________________Bank. However, if tenant does not move in for anyreason, other than Landlord’s decision not to rent the apartment, this holding deposit shallbe forever forfeited and shall not be refunded. Lastly, I retain the right to not rent to thisapartment for any reason and in my own sole discretion, however, if I so exercise mydiscretion not to rent this apartment I will return the holding deposit in full.

____________________, __________Landlord Signature Date

By my signature(s) below, I request that the landlord accept $_______ as a holdingdeposit for _________________ Apt#___ , and the payment of such deposit shall resultin the Landlord not accepting any other tenant(s) for rental of this apartment up and untilthe commencement of my lease on __________. I understand that this deposit will becredited to my security deposit when I move in.

I further understand and agree that if I should change my mind or become unable to movein for any reason, other than Landlord exercising discretion not to rent the apartment, thisholding deposit will be forfeited by me, and I will receive no refund of the deposit.

Monthly rent per lease will be due upon move in the amount of $__________.I acknowledge and agree by my signature below that the additional security deposit I willowe at the time of move in is calculated as follows:

Total security Deposit Per Lease of $__________.Less Holding Deposit of $__________Equals $_________, which is the amount of security deposit due upon move in.

Lastly, I agree and acknowledge that Landlord may choose not to rent to me for anyreason, however, upon Landlord so electing not to rent to me, I will be entitled to a fullrefund of the holding deposit .

____________________, __________Tenant 1 Signature Date

___________________, __________Tenant 2 Signature Date

Erin O'Connor Smith · Answer

@Michelle B. can you please share that language?

Tony Castronovo · Answer

Michelle B. I assume you have a clause in your lease agreement that describes this arrangement?  I'd be interested in the wording you use if you don't mind sharing.

Tony Castronovo · Answer

Thanks @Larry P..  Neither of those actually address my question of the timing to collect the deposit.  I read through both documents and the language is vague and not relevant to timing to collect.  However I do think it is fair and proper to collect the deposit at lease signing and first month's rent prior/at move-in.

Thanks for your input.

How to handle deposits at lease signing

Most Popular Reply