Week and a half later tenant wants security deposit back

14 Replies

Hello everyone. I don’t know where to start, So I had an appointment for rent. I had a family come and look at the apartment. Decided they want it I did background checks and they were approved Took the apartment off the market a week and a half later. The tenant called me and told me they do not want the apartment anymore I have their security deposit and now they want it back in full? I don’t know what to do. This is my first property investment..

You know the thing where you ask someone to the school dance, and they say "Yes" to you, but a week and a half later, they "remember" that someone else had asked them first?

They got some other great opportunity, and want out. The BIG question is this: did they SIGN A LEASE?

If they have not moved in it is best that you give them back their deposit.  In real estate it is called transaction falls through.

Try a half refund explain your loss of other interested people.

I never take a property off the market until someone has signed, given me funds and moved in. You are not occupied until you have checked off all three boxes. Renew your ad, follow up with past showings and give them their money back. No sense in taking @Terry Miller 's girl to the dance if she's going to be a terrible date because she would rather be with Terry. Don't push it.

So what did they sign,, if anything,, your "Holding Fee/ Security Deposit Agreement" document should list the terms of just that,, the apartment has been Held, money has been recieved, and it holds the apartment until move in, it becomes the security Deposit after they take occupancy. My document states that if they default, either don't sign lease within 3 days they get a percentage back from the holding fee only if I rent the apartment to someone else for the same date that they were going to move in by.. If a lease is signed and they don't move in it also states the same.. 

Check you state landlord tenant laws and get and use the proper forms to protect yourself against this happening,, it does and will .. you had costs involved ,, running the credit check,, and re-advertising,, showings, so you have incurred costs and the percentage you could hold as a fee to cover this should clearly be listed in the "Holding Fee / Security deposit agreement,, that agreement should also state clearly that the holding fee becomes the security deposit once occupancy begins.. Hence the term Holding Fee..

It's a business use the proper forms for your applicants and tenants. 

As others have pointed out it depends on your lease, assuming they signed a lease which they should have when you accepted the deposit.

If you did not protect yourself then lesson learned.

Originally posted by @Kristina Heimstaedt :

I never take a property off the market until someone has signed, given me funds and moved in. You are not occupied until you have checked off all three boxes. Renew your ad, follow up with past showings and give them their money back. No sense in taking @Terry Miller 's girl to the dance if she's going to be a terrible date because she would rather be with Terry. Don't push it.

 Yup. When we send a lease over to an approved applicant, they have 48 hours to sign the lease and remit funds. We don't take the house off the market during that time, and continue to show, but we do let people know there is an application pending. If the applicant doesn't sign the lease and remit funds within 48 hours, we open the application process back up to the next qualified person in line. 

Nothing is done until first/last/deposit is paid and the lease is signed. 

When I get an approved applicant that wants to rent a unit that is available now, but doesn't want to move in right away, I have them sign a "nonrefundable hold agreement".  Note that I will only do this for a week or so.  I would not hold a unit for a month.  This agreement includes payment of an amount equal to the security deposit and has a date for lease signing.  It also says "Nonrefundable" in big, bold print multiple times.  If they do not sign the lease by the specified date, I keep the deposit.  If they do, the deposit become their security deposit.

If you've done an agreement like this, no, they do not get the deposit back.

When we sign the actual lease, they must hand over a FULL months rent and the FULL security deposit in cash (preferably) or money order.  Never a check.  I hand over the keys.  My leases usually run by calendar months.  If we sign the lease a few days before the end of the month I will give them those few days for free and note that in the lease.

I didn’t sign a lease with the tenant. But I gave them a receipt for the amount that they gave me.

Originally posted by @Keith Torres :

I didn’t sign a lease with the tenant. But I gave them a receipt for the amount that they gave me.

 Ok, so they didn't sign the lease or anything with you, but gave you the security deposit ??

I would not take the listing off the market until the lease is signed, and yes you should give them the money back!

Should have signed the lease but I think return money and move on. Lesson learned.

Originally posted by @Keith Torres :

I didn’t sign a lease with the tenant. But I gave them a receipt for the amount that they gave me.

Originally posted by @Thao Kieu :
Should have signed the lease but I think return money and move on. Lesson learned.

Originally posted by @Keith Torres:

I didn’t sign a lease with the tenant. But I gave them a receipt for the amount that they gave me.

If you have no written agreement with the tenant, return their money and resume showing the property.

I already described my process for a hold deposit.  If I had that and they changed their mind, I'd point out the "nonrefundable" statement in the form they signed.

The other possibility is that an approved applicant says they want it, but don't want to move in for a while.  I'm guessing you approved them about 10/10 and they wanted to move in on 11/1.  I would not hold a unit that long because I would expect to get someone to move in sooner (our market is very hot for rentals.)  I would not take any money in that case, but would tell them that I will continue to show the unit and if I get someone who will move in sooner, they would have the right of first refusal.  That is, if I found someone willing to start a lease on 10/15, I'd contact the first applicant and offer that they could move in and start paying rent on the 15th.  If they decline, the second applicant would get the place.

Give the money back. No question about that.  

In the future, keep showing the house and get applications until somebody signs the lease. 

For ex. I usually do not take security deposit until they signed the lease. There is no 'i give you $$$ keep it for a week or so.' They need to decide they want to live here or not. If they want , they sign a lease and pay security deposit. Until they do that, I keep advertising and accepting applications... 

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