What is the best way to avoid the situation of having a signed lease and no payment before move in? Don't want to be stuck with a stall for weeks then non-payment.
Does the act of signing make it a valid lease or does the consideration/money need to be delivered to be valid?
Will a clause in the lease saying not valid until money is received, and lease offer is revoked if not received within 3 days of signing solve this?
I'm in California, if someone could point me to relevant law - thx!
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
6y
@Alan Bosca don't allow them to move in until you have deposit and rents. Generally we do a lease signing and collect security deposit, and first and last, in the form of a cashier's check before move in, On move in day we do a video inspection with the tenant in the video. I hope you have not given them a key. If you have, then get a locksmith over there and change the locks. Better start things off on the right foot.
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
6y
How we work it is if an applicant is accepted, they have to pay a "holding fee". That amount is equivalent to the security deposit in our case. That takes the property off the market and "holds" it for them. If they don't execute a lease and move in, they don't get that fee back as it was "spent" by holding the property. If they're ready to sign the lease, we do that in person (even in our out of state properties) and payment is made at that time, everyone signs, we do the walk through inspection and their copy of the lease is handed to them.
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
6y
@Alan Bosca don't allow them to move in until you have deposit and rents. Generally we do a lease signing and collect security deposit, and first and last, in the form of a cashier's check before move in, On move in day we do a video inspection with the tenant in the video. I hope you have not given them a key. If you have, then get a locksmith over there and change the locks. Better start things off on the right foot.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
6y
Collect the money at the lease signing. If they don’t bring the money, don’t sign the lease. And definitely do not hand over the keys to anyone who hasn’t paid all money owed (i.e. first month’s rent, security deposit, etc).
Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes
6y
Lease signing and payment is done at the same time. I do like @John Teachout idea of a holding fee. But typically I just collect all payments at the same time, via money order or cashiers check (always ends up being money order).
Get the deposit when they sign the lease and state that it is non-refundable if they change their mind and will become their security deposit when they move in.
Attorney · Carrollton, IL · Member since 2020 · 65 posts · 14 votes
6y
@Alan Bosca Yes, leases - like all contracts - need consideration to be enforceable. That said, the consideration need not be financial, but must have value (ex. right to immediate possession).
I never have the lease signed until I have the security deposit and rent in certified funds that means money order or cashiers check. If they were to sign it I would not sign it until I had funds. I’ll take a deposit which is 50% of the rent, but that has nothing to do with the lease. Take control of the situation and avoid the lease signing without funds.
Investor · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
6y
Like @John Teachout I use a ‘deposit to hold’ that takes the property off the market and saves it for them, along with 1 month rent.
If they flake out, that deposit is forfeited. I feel it also gives me some alternatives if something happens that I need to get them out of the lease - there is no lease yet!
On the day I’d move-in, we sign the lease together, they hand over the first months rent, and I explain how the deposit to hold becomes the security deposit. And they get the keys.
I feel that a future tenant having a signed lease before they move in could be problematic (if a prior tenant doesn’t move out, house isn’t ready, etc).
What is the best way to avoid the situation of having a signed lease and no payment before move in? Don't want to be stuck with a stall for weeks then non-payment.
Does the act of signing make it a valid lease or does the consideration/money need to be delivered to be valid?
Will a clause in the lease saying not valid until money is received, and lease offer is revoked if not received within 3 days of signing solve this?
I'm in California, if someone could point me to relevant law - thx!
The lease is not executed until both/all parties have signed it. NEVER, EVER sign a lease until you get ALL the move-in funds and then only after the tenant has signed.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
6y
If you are in a situation where you are holding the apartment until the tenant has the rest of the funds, we use a 'reservation fee' and have the potential tenant sign a reservation fee form. What you can do in that case may be different in California-- in Ohio, a 'deposi' is expected to be returned so we don't take a deposit for a reservation.
Don’t sign the lease until you receive the funds. I tell people who are really interested on the property that I won’t hold it until I receive the money. If they truly want it, they will pay quickly as to not lose the chance of moving into the unit. The properties that I own are in a feeding frenzy though. May be different where you are.
Rental Property Investor · Peekskill, NY · Member since 2019 · 31 posts · 11 votes
6y
@John Teachout can you talk a little bit more about the utilities comment. How does that work if tenant doesn't have possession of the unit? Does it mean they have a lease but you delay hand over of keys until utils are switched.
@John Teachout can you talk a little bit more about the utilities comment. How does that work if tenant doesn't have possession of the unit? Does it mean they have a lease but you delay hand over of keys until utils are switched.
Yes, we give them a lease so they can get the utilities turned on but they don't get possession until they show it's been transferred over. Depending on the area, the city may provide most of the utilities and in other cases they have to do multiple accounts. eg, one we're doing later this week: city provides water/sewer/garbage. Electric is direct to utility provider.
Sacramento, CA · Member since 2014 · 513 posts · 319 votes
6y
@Alan Bosca,
Always collect all funds up front at the lease signing. It's also a good idea to request a copy of their photo ID in case you need to serve them an eviction notice. If your property is in California review all the landlord tenant laws particularly those that went into effect January this year.
Rental Property Investor · Indiana...mostly · Member since 2019 · 468 posts · 245 votes
6y
Not sure about California but i don't hand over keys until: 1) utilities are in their name, 2) lease is signed, 3) they have me 1st month rent and security deposit in certified funds. (I pay $5 for the cost of the certified funds). future rent payments can be personal check. All tend to happen on the same day. I suspect in my state that signging the lease alone doesn't form a contract without "consideration" in the form the that first money. I doubt you could force them to move in and I doubt they could force you to let them move in based on the lease alone but in California who knows?