Good afternoon! I have the good fortune of having replacement tenants lined up 4 months before my current tenants lease ends. If the replacement tenants are willing to go ahead and sign their lease, even tough they won't take possession of the property until May, is there any reason I shouldn't go ahead and get the new lease executed today vs. waiting until May?
I may have just thought of a reason. If they sign the lease today, I'll require their deposit + full first months rent. If they only sign a deposit to hold agreement, then they have 4 more months before having to fork over their entire first month's rent. Would there be any other factors to consider?
If we have a tenant who will be moving in one week or later after we offer the unit. We meet with them, sign the agreement with the wording that the remaining deposit and first month rent are due at move in. We also sign and collect a holding deposit.
If your tenant never moves in, you can go after them for funds, but it is so much easier if you have a holding deposit in hand. It should apply toward the security deposit, or not be refundable if they don't move in.
We've never held a unit that long, I'd want a high amount collected to ensure they have skin in the game and aren't fully committed to moving in.
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Sign the lease, take a deposit equilivant to one months rent and take the first month rent in cash when you hand over the keys.
We do almost the same thing as @Michele Fischer except structure it slightly differently in that we name it a holding 'fee' and apply towards rent and have them sign something at lease signing stating they understand that this fee is non-refundable.
Thank you for all of the replies. I will get them to sign the lease and collect the deposit, which is the equivelant of one months rent, and make the first month's rent due prior to handing them the keys. I appreciate all of your time and thoughtful replies!
If you have a tenant lined up four months in advance, there's a very good chance you're renting well below market rate.
That said, I would collect the deposit and have them sign an agreement that it is non-refundable if they fail to lease the property. Collect the first month's rent when they sign the lease.
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