Lease Addendum for a tenant who wants to hold

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Lease Addendum for a tenant who wants to hold

Kasey Destache
Realtor · Keller Williams Westside Los Angeles · Member since 2020 · 42 posts · 7 votes

Hi BP Fam! 

I have a question regarding a prospective tenant with a move in date of June 25th, 2021. I currently have my Los Angeles unit listed on various websites and have a few people looking at the place. The prospective tenant understands compensating for the hold. I'm a little confused on how I should list the following breakdown in the lease agreement and addendum in order to hold it for her, especially because we are potentially losing out on more than half of a full month's rent and I believe we are being very fair with the below breakdown of cost. We also don't want to list anything as a "holding deposit" because the money will not be refunded.  

Her move in date is June 25th, 2021. Security deposit is $1700. Rent is $1700. If we prorated her June rent, it would be $340 for her June 25th move in date. However, the landlord would only receive $2040 up front, if that's the case. The landlord wants to charge $3740 for security deposit, month of July 2021 up front and a $340 (which is her prorated rent amount for June). Instead of calling this a holding deposit, we want to charge July up front since it is the following week any way. Can someone assist me on how I should write this in a CA leasing agreement and addendum? Is this legal? Any feedback is much appreciated! 

Thanks in advance!

Kasey

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  • Jonathan Taylor
    Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes
    5y

    @Kasey Destache

    Have her fill out a deposit to hold agreement which states that she puts the deposit down now ($1700) but if she does not  move in with in a certain timeframe, then the deposit if forfeited to cover your relisting costs. If she does move in, then the money down becomes her deposit. As for whether you want to hold the unit until then, its up to you and the qualify of tenant you have on your hands. 

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  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    5y

    @Kasey Destache  Why not just tell her to take it June 1 and see if that flies.  Otherwise keep looking for a June 1 move in. 

    Alternately ,  It sounds to me like the landlord wants her to pay June and July rent so just say on the lease its $2040 for June 25, 2021 to July 30, 2021 and $1700  a month thereafter  with a $1700 security deposit.   Have her sign that the $1700 of this is a holding fee  that is a non refundable fee that converts to a security deposit on occupancy, that way she understands that first months rent is paid regardless if she takes occupancy.  That is $3740 all in to her like the landlord is asking for.  If he wants it all non-refundable write it that way. 

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  • David M.
    Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
    5y

    @Kasey Destache

    I don't know CA, so just a layman's approach:

    Write the lease to start Jul 1.  Allow the tenant to take possession Jun 25th with the prorated rent.  Now you have the prorated rent, 1st mo rent, and the security deposit as due.  Start negotiating from there.  From the landlord's perspective, of course, (s)he would want all amounts at signing.  If the tenant is really serious, the tenant would hand everything over.  Otherwise, let the negotations begin (or whatever is more common for your market)...

    P.S.  Are you an agent or property manager?  Don't you have a broker to ask instead of a public forum?

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  • Kasey Destache
    OP
    Realtor · Keller Williams Westside Los Angeles · Member since 2020 · 42 posts · 7 votes
    5y

    @David M. That's what I was thinking but also need to know how to word it in the agreement and make sure I'm able to do this correctly with dates and costs. This is simply a prospective tenant so I may not end up choosing her but decided to throw the question out there if all checks out. There's plenty of brokers who are members of this website whom I was hoping could answer my question since this forum is for questions.

    I'm just starting out as a property manager for my parent's property, which has a backhouse unit I recently renovated for them. I am also asking a friend who is an attorney however, she is not a real estate attorney. Any feedback is appreciated. 

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  • David M.
    Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
    5y

    @Kasey Destache

    Oh i see...  Well, I don't know CA's lease agreement verbage.

    But, basically its what i said I think meets what you want.  The prorated rent, the 1st mo rent, and the security deposit are due upon signing of the lease.  You wanted it upfront, right?  honestly, its not clear what you want vs. what you are "concerned will happen..."  Many times in these instances, you really just need to say what you want in plain language is what I have found in my layman's experience.

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  • Kasey Destache
    OP
    Realtor · Keller Williams Westside Los Angeles · Member since 2020 · 42 posts · 7 votes
    5y

    @David M. Agreed! What I want is since we're basically doing her a favor and holding for a long period is as follows:

    Move in Date: June 25th (prorated month total $340) 

    Security Deposit: $1700 

    Month of July paid in full upfront: $1700

    Total up front: $3,740 by June 1st along with signed lease agreement & addendum if we're going to hold for her. 

    However, I cannot list any cost in this breakdown as a "holding deposit," because holding deposit must be refunded and we are not refunding anything. Personally, I see nothing wrong with this but I don't know California law regarding this particular situation so I just want to confirm to avoid any legal issues. 

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  • David M.
    Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
    5y

    @Kasey Destache

    This "hold" concept is what I don't undnerstand...  From my point of view, if she signs the lease and it says that the lease starts Jul1 st (with possesion at jun25 --- or the lease starts jun 25, rent due on the 1st, and the it ends on the Jun 30th 2022 --- whatever), she has a signed lease and your parents have a tenant.

    You seem to be mixing this up with some sort of option or reserving a table at a restaurant????????  Is this prospective calling "dibs" and you calling "no backsies?"

    Technically nothing stops you from renting the property out from May 20th to Jun 24...  If your concern is that the unit sits empty for just over a month..  then take your chances and don't accept this tenant.

    Or, is there something in CA (it is a weird state I keep finding) that you can't sign a lease today that starts sometime in the future?

    Hope this helps.

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  • Kasey Destache
    OP
    Realtor · Keller Williams Westside Los Angeles · Member since 2020 · 42 posts · 7 votes
    5y

    @David M. I completely agree with your last statement "CA is a weird state" and the lease terms you provided. Basically, I'm unsure if I can ask for the total amount of $3740 for the breakdown I provided but I personally don't see an issue. In general, usually landlords will allow a "holding deposit" and a signed lease agreement, which is exactly that.."No backsies" and the landlord gets to keep your holding deposit if the prospective tenant does decide to back out last minute. If they move in and all checks out, the landlord has to refund the holding deposit, which doesn't make sense to me because I think the landlord should be compensated for holding since the landlord has to hault tours. Anyway, I'm not even sure if I'm going to choose this prospective tenant and I'm going to confirm with an attorney so thanks for your input. 

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  • Adam Martin
    Rental Property Investor · Member since 2020 · 1k+ posts · 1k+ votes
    5y

    What is so great about this prospective tenant that you are willing to hold until the end of June, this is way too long.  They are just applicants until you get their deposit and I give 24-48 hours to pay and it is a big part of my screening.  They know they are moving and that they will need funds and if they weren't able to plan for that and have come cash in the bank then they can be someone elses problem.  Is there a reason you are waiting until June 1st to collect the deposit because you are locked in way more than them if something better comes along.  I would just word it that they need to provide Julys rent plus prorated Junes rent as well as a non refundable deposit at the time of signing that will transfer to deposit upon tenancy.  

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  • Kasey Destache
    OP
    Realtor · Keller Williams Westside Los Angeles · Member since 2020 · 42 posts · 7 votes
    5y

    @Adam Martin To be completely transparent, she is a very qualified prospective tenant and my listing has been up for a month and have only received unqualified tenant applications, so I'm losing money due to vacancy. This week I've been receiving more leads - thank goodness - so I have hope I will find a more suitable and qualified tenant who will move in at an earlier date. June 1st would be ideal. She definitely has the funds and is understanding but writing this up in an agreement and addendum gets tricky and I don't want to run into any legal issues. However, I think you're correct and will write "that they need to provide Julys rent plus prorated Junes rent as well as a non refundable deposit at the time of signing that will transfer to deposit upon tenancy" in the addendum. I'm probably just being paranoid but Google and CA's arbitrary laws don't help much. Thanks for the feedback! 

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