Collect Move-in Fee, No Sec Deposit Correct?

9 Replies

Hey! quick question for ya. Is it ok for landlords to take a movie-in fee instead of a sec deposit? Have one client who applied this and is under the impression they dont have to collect sec deposit, only move in fee which is non- refundable toward the end of the lease. Is this ok?

Hi @Ellis Dudley

Yes! Many people in my market have turned to non-refundable move-in fees instead of security deposits. From what I've seen they usually charge around half a month's rent. Personally, I don't do it because I feel it take away the incentive for the tenant to take care of the unit but it's definitely a good way to get people in. Good luck!

@Ellis Dudley it depends on your location and goals. I personally would never not collect a security deposit.

But I understand in certain areas like Chicago and others, the laws are such that make security deposits less worthwhile from the landlord perspective. So instead a move-in fee covers the cost of ‘average’ damage to the unit.

Of course, unless your state/city laws dictate otherwise, you could do a move-in fee PLUS security deposit. Unless that makes you uncompetitive in the market. I understand in NYC, apartment buildings often do both.

@Ellis Dudley - it depends on the local RLTO.  For example, Chicago has strict rules regarding a SD so it is common to charge a move in fee instead.  But if that move in fee is more than 1/2 month rent the city recognizes it as a SD and will fine you for not following the SD rules.  

Bad idea in almost every instance. Once the tenants know they will never get the money back, they have no incentive to clean or even pay last month's rent. The deposit is your leverage. Without it, you have nothing to incentive the tenants to abide by the terms of the agreement.

The only way this would work is if you have a lot of rentals. The majority of tenants would leave the property in good condition and the 20% that don't would be covered by the collected pool of funds. Say you had 10 rentals and each tenant paid $500. That's only $5,000 to cover cleaning and repairs, which one bad renter could easily cost. I would think you need 25 to 50 rentals at a minimum to make this worthwhile.


You certainly can, but I think folks would be more resistant to a month or month and a half "fee" that is non-refundable. I like tenants to still have skin in the game. So I recommend you take the largest security possible. 

You can then charge a complimentary administration/move-in fee. Really depends on the market you are in though. 

Originally posted by @Ellis Dudley :

Hey! quick question for ya. Is it ok for landlords to take a movie-in fee instead of a sec deposit? Have one client who applied this and is under the impression they dont have to collect sec deposit, only move in fee which is non- refundable toward the end of the lease. Is this ok?

Tell your client that this is local law dependent.