Military Tenant Going on Deployment

Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes

So I understand that a tenant has the right to break a lease with military orders, but our rental agreements are M2M with this move-in fee caveat.

For example:

Rent $1650.

Refundable deposit $825.

Non Refundable Move In Fee $825 - added to refundable deposit if tenants has stayed for 12 months and is in good standing.

This is a great way to have the flexibility of M2M and include the incentive to have people stay at least one year, or know up front the fee for getting a unique short term rental. Before moving in, the military guy knows he is going on deployment in 6 months. He doesn't care about a lease because he knows he has the military right to break a lease. But for my terms can I still keep his move-in fee, or does the military card trump my move-in fee policy?

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Lynn McGeein

Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes

I'm not a lawyer, no legal advice, but, at least in our area with heavy military presence, it would be bad form to charge a service member an $850 fee because they received new orders, even if it was legal to do so.

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Will FraserPro Member
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
6y
Hi @Julie Marquez, I like this setup a lot! Could I go back in time I would use this instead of 1-year leases with new tenants!
I'm following closely to see what the conclusion in regarding Orders.
2 Reply
Jingru Sui
Real Estate Agent · Atlanta, GA · Member since 2014 · 683 posts · 317 votes
6y
I like that M2m Structure as well. Not sure if you can keep the military non refundable tho.
1 Reply
Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
6y
@Julie Marquez I am not a lawyer; but your agreement is with him and not the military. He signs the lease, pays the rent, pays security deposit, gives you notice as required in your jurisdiction. Looks pretty cut and dried; you refund the half deposit minus any damages. Let us know how it goes!
4 Reply
Dimitri Paspalaris
Investor · Rota, Spain · Member since 2019 · 156 posts · 68 votes
6y
I would ask a lawyer about this to cover yourself.
3 Reply
Kristopher KyzarBusiness Member
Rental Property Investor · Norfolk, VA · Member since 2017 · 260 posts · 174 votes
6y
@Julie Marquez being a military member myself, the clause is to allow military members the right to break a lease in the event of a deployment or PCS. It does not apply to anything in the lease agreed to as a "fee". It does cover security deposits, but if there are necessary repairs, those should be accounted for. There are still requirements for notice though. Here is an overview:

https://www.military.com/benefits/military-legal-matters/scra/scra-lease-termination-provisions.html
10 Reply
Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
6y
Regardless of Military affiliation, does the state's landlord/tenant laws allow for such a large move-in fee? It looks to be 50% of a traditional security deposit, but the fact that it is non-refundable makes me question if it's within the landlord/tenant laws.
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Lynn McGeein
Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
6y
I'm not a lawyer, no legal advice, but, at least in our area with heavy military presence, it would be bad form to charge a service member an $850 fee because they received new orders, even if it was legal to do so.
14 Reply
David OechsleinPro Member
Rental Property Investor · Alexandria, VA · Member since 2018 · 22 posts · 17 votes
6y
@Julie Marquez I'm not a lawyer, but I am active duty military. The Service Member's Civil Relief Act language only refers to terminating the lease. It doesn't have any language specific to other terms of the lease (such as deposits or fees). If your military tenant is signing a M2M lease, then the SCRA wouldn't even come into play - IMO. Furthermore, the non-refundable move-in fee is just that - a non-refundable move-in fee. Just because you offer to convert it to a refundable deposit after 12 months of tenancy doesn't mean that the SCRA entitles the service member to that non-refundable fee. That service member agreed to those terms upon signing the contract.

https://www.justice.gov/servicemembers/servicemembers-civil-relief-act-scra

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Sean RooksPro Member
Rental Property Investor · High Point, NC · Member since 2017 · 272 posts · 304 votes
6y
Maybe have the service member sign an addendum stating they are aware of the deployment in 6 months, and agree to accept the move-in fee? The SMCRA intent was to avoid extra fees for needing to break a lease in the event of a sudden deployment, not for Service members to use it to their advantage in the case of a known deployment. But I agree... have a lawyer look this one over.
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Julie MarquezPro Member
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Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes
6y
@Mindy Jensen Washington State (outside of Seattle) does not have a maximum of how much we can charge for deposits and fees. I'm outside of Seattle in Skagit County. In Seattle, the maximum of deposits plus fees (as a total) is equal to one month rent.
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Julie MarquezPro Member
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Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes
6y
@Will Fraser @Jingru Sui This setup has been great for us! Most people stay well beyond a year, regardless of the terms
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Julie MarquezPro Member
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Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes
6y
@David Oechslein Very helpful reference there, thank you! I did look up our state law and it says the same things that you stated, about the lease terms and nothing about fees.
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Jeremiah GoodpasterPro Member
Member since 2020 · 28 posts · 15 votes
6y
@Julie Marquez the reference Dave gave you provides a overview of the SCRA statues its states "
The SCRA, enacted in 2003 and amended several times since then, revised and expanded the Soldiers’ and Sailors’ Civil Relief Act of 1940 (SSCRA), a law designed to ease financial burdens on servicemembers during periods of military service. See 50 U.S.C. §§ 3901-4043. The SCRA is a federal law that provides protections for military members as they enter active duty. See id. It covers issues such as rental agreements, security deposits, prepaid rent, evictions, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, civil judicial proceedings, automobile leases, life insurance, health insurance and income tax payments. See id.
I am not a lawyer but Like Dave I am active duty. I have assisted one of my soldiers from getting back their deposit and some "fees" in the past none as high as you are charging but I would seek legal advice from a lawyer who better understand the details in SCRA. I recently read that the Government was vigorously pursuing individuals and companies that violated SCRA. Or just not rent to military personnel.

6 Reply
Matt McMacken
Flipper/Rehabber · Watertown, NY · Member since 2020 · 26 posts · 38 votes
6y
@Julie Marquez Military members are unique in the fact they can walk right into JAG/legal services and have representation. It’s not going to cost a service member an arm and a leg to get back their money.
If the case can be made that the lease terms specifically target military members as well it could mean serious trouble. I live in a military community and have seen the base blacklist companies and even shut down businesses if they are considered “predatory”.
A lawyer would really be able to provide some solid guidance so that your not putting yourself at risk.
3 Reply
Jonathan R McLaughlin
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
6y
@Julie Marquez
Boo.
A workaround to the intent of the law designed to protect deploying military.
Not cool.
6 Reply
Jacob Powers
San Diego, CA · Member since 2019 · 23 posts · 4 votes
6y
@Julie Marquez is keeping that $825 really worth the possibility of this service member spreading to all other service members he knows bad word about you/your company? What if you are legally right and can keep the fee but he tells his coworkers what you did and then you have a hard time renting to another service member for awhile? Things like this can leave a bad taste in people’s mouth.
At the same time thought this is an intriguing rent strategy that we will be looking into ourselves. Personally if we do go forward with it we would be refunding the fee for service members.
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Julie MarquezPro Member
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Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes
6y
@Jacob Powers So you are suggesting I refund the fee for service members? But what about for other people who also understand our terms and need to move before one year? How do you suggest I treat everyone fairly?
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Julie MarquezPro Member
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Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes
6y
@Jonathan R McLaughlin I appreciate your response! It's a deep moral question of mine, hence why I came to all my friends here on BP. I know the law can't pin point every single unique situation, so that's why I ask and try to understand as much as I can
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Jacob Powers
San Diego, CA · Member since 2019 · 23 posts · 4 votes
6y
@Julie Marquez this situation is tough because him knowing about the deployment ahead of time. With that I think this situation I would consult with a lawyer to make sure that hanging on to the deposit is legal and would probably do that, however if he didn’t know about the deployment when the lease was signed and later found out in that situation I would probably refund it but once again I’d have to look into the details more and talk with my partner to come up with a process. Maybe a partial fee refund?
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Julie MarquezPro Member
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Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes
6y
@Matt McMacken I see what you're saying. At the same time, I think a lawyer would see my clearly stated rules and see that I need to treat all people equally. But you've got me thinking and I'm going to seek advice from my lawyer and those way smarter than me
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Julie MarquezPro Member
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Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes
6y
@Jeremiah Goodpaster I'm very interested in this, thanks for the information. I don't rent to many military, but currently do have one tenant who is on deployment and still paying us rent while she is gone. I am open to renting to any qualified applicant, but maybe military people will find that my unique rental agreement is just not for them and will not choose me.
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Julie MarquezPro Member
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Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes
6y
@Kristopher Kyzar Thanks for the info!
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Julie MarquezPro Member
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Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes
6y
@Jacob Powers Exactly. This question was unique in the fact he hadn't signed a rental agreement yet, but knew he was going on deployment in 6 months. I would have a completely differently feeling if he was already my tenant. Anyway, he decided not to pursue our house, and maybe because of the fee - I don't know exactly.
There is a lot of grey area in fee refund and I try to keep it black and white. But what if they were a great tenant but only stayed 11 months. My other thought is a graduated fee refund. Different question though. I usually don't have this many issues because most people stay over a year, and the people who stay less are accepting my terms and want a short term agreement.
1 Reply
Jeremiah GoodpasterPro Member
Member since 2020 · 28 posts · 15 votes
6y
@Julie Marquez yeah if you are not in a military community then it probably won’t be a issue. As one of the posters stated it wouldn’t take much to get you individually or as company blacklisted. Here in Germany where am at currently with COVID the rental market was limited with no one PCSing and the only company with a good amount of rentals is a company blacklisted and guess what they will still have a ton after. Honestly do not see the value in the fees that high might be better time and energy spent in improving the screening process. But am new and don’t know Jack lol, just see it as a indicator if I had to result to having a high fee(I assume you came to that decision based on it happening a bunch) that what am I missing in the screening that I could use to predict who is likely to bounce. Good luck anyway you go.
Also it is not uncommon for a person to know a deployment is coming up but have to live some where. I would say most military members would be upfront about it, like how else did you find out they already knew.
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Lan Raby
Member since 2019 · 61 posts · 44 votes
6y
@Julie Marquez. That is illegal by the act.
Although inconvenient to manage an early lease break, landlords, by law, must return a full security deposit minus the previously agreed on damage assessments found in the lease, typically, “normal wear and tear.”
Tenants cannot be penalized in any way for utilizing the SCRA in appropriate situations.
Renters sometimes have the luxury of couple of months’ notice of transfer. If the tenant submits the written notice before the required 30 days, the landlord cannot evict the tenants early.
If the tenant has prepaid any monthly rent fees, the landlord is required to refund the rent up until the termination date.
The SCRA isn’t restricted to only the service member. The family is covered as well, meaning, the spouse is not responsible for the lease even if their name is on the document.
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