Non-refundable damage deposits?

25 Replies

Hi everyone!

This is my first time starting a new lease that was not an inherited tenant. Luckily i got pretty lucky with the inherited tenants, i know thats usually against the rules ;) 

I am looking for advice on damage deposits and non refundable damage deposits more specifically. My father owns a few properties in Marysville, my property is in Mt. Vernon. My father told me to collect $300 as a non -returnable fee, for cleaning etc, as well as first months rent of course ($1200), a $900 refundable security deposit (with the fee totaling 1200) . They also have a small dog, so we are charging them only $20 / month pet fee, as well as $200 non refundable pet fee and $800 refundable pet deposit.

I am not sure about all of these non refundable fees and deposits. I want to make sure i am covered, but we also are renting to mutual friends, which i was unsure about. Is this pretty standard to have non refundable fees for cleaning etc? 


Thanks for the help!

Primarily, make sure the deposits that you collect are within legal limits. In my state, NJ, landlords cannot collect more than 1.5 times rent as a security deposit (last month's rent is considered security deposit also). Also, there is no such thing as a non-refundable deposit. Your lease should call it a move in fee or it should be a (refundable) security deposit. To call it a non-refundable deposit puts ambiguity in your language.

@Blake King I also collect last month's rent on top of what you are collecting. Renting to friends and family can go badly. We rented to my MIL for about 20 years.............she was a fine tenant but not so much financiallyI Don't think we ever raised her rent! LOL

It is crucial to give them a move-in checklist to limit disputes when they move out. This affects what you can withhold from damage deposit.

Thanks everyone! I do wish we were not renting to mutual friends, otherwise i would have no problems with leaving it as it is... My wife had already mentioned it to them, and they took it as they could move right in... Shes new ;) so @Andrew B. you suggest either just changing it to a larger deposit (refundable) or changing it to lets say a $200 move in cleaning fee? or maybe something like $200 pet fee on TOP of the damage deposit and pet damage deposit? I will be sure to do a great move in checklist with them. To be fair the house needs some work. 

follow up question @Ruth Bayang maybe you know, if we do updates to the house while they are there, do you do a new move in checklist? or make note on the previous move in checklist?

Thanks everyone!!

Originally posted by @Blake King :

Thanks everyone! I do wish we were not renting to mutual friends, otherwise i would have no problems with leaving it as it is... My wife had already mentioned it to them, and they took it as they could move right in... Shes new ;) so @Andrew B. you suggest either just changing it to a larger deposit (refundable) or changing it to lets say a $200 move in cleaning fee? or maybe something like $200 pet fee on TOP of the damage deposit and pet damage deposit? I will be sure to do a great move in checklist with them. To be fair the house needs some work. 

follow up question @Ruth Bayang maybe you know, if we do updates to the house while they are there, do you do a new move in checklist? or make note on the previous move in checklist?

Thanks everyone!!

Your deposits and move in fees should be dictated by what the market will support. In my market, a tenant would laugh if we tried to charge a move in fee, but in Detroit (from what I hear) they only charge move in fees with no deposit. My suggestion is to correct the verbiage you use. If you are unsure what your market dictates, call a couple listings and ask what they require. 

The market in Mount Vernon will support almost anything reasonable. I work there and know that coworkers have difficulty finding rentals. 

I have a couple houses in the Oly Penn. There are few rentals available there too, particularly where ours are. We charge first, last and damage deposits. I considered doing a non-refundable portion but feel that it is my problem to shampoo carpet after a tenant leaves (I actually own a pretty heavy duty cleaner). Unusual damage would be paid by the damage deposit. 

I charge a $350 non-refundable pet deposit since I feel at the very least I will have extra cleaning such as a professional carpet cleaning to make sure dog/cat hair is completely removed and even a faint smell is gone. I've also had yard damage (even good dogs can affect your grass and shrubs). I also charge $35 pet rent.

Never rent to friends. I had an employee that I rented to. Cost me $10k and I almost had to evict her too. Luckily, she left on her own and in about 9 months (I normally did inspections once a year. I now do them every 6 months). The fact that these friends are just assuming is not a good sign. They may also assume that rent is optional. How are you going to handle lease violations? What if they don't let you inspect? 

Another bad story about friend/tenants. So we bought a house out in the oil field boom area while we were working there. We had some friends who wanted to find a different place to live but they needed to wait for the landlord to give them back their deposit. We agreed they could move in while they waited for the deposit and then they would look for a rental. It was hard to find housing back then. We set a deadline about 3 months in the future and agreed to a minimal rent. Apparently maid service was supposed to be part of the rent. They also bought one of our minor children alcohol without asking us.  They also taught him to drive, without a permit. Then they decided that they had paid us enough rent so didn't want to pay anymore. Hubs had known this guy since elementary school. My husband was back home and had a serious accident and we chose to move back to Oregon and sell the house in North Dakota. We told them they had to leave since we were selling the house but said that they got first shot at buying it. They couldn't finance it and we couldn't carry so they were pissed at us. My husband lost a friend from elementary school over this.

My niece and nephew have a similar story. 

PM me what you are renting and how much. I think someone at work is still looking for a rental.

Originally posted by @Blake King :


follow up question @Ruth Bayang maybe you know, if we do updates to the house while they are there, do you do a new move in checklist? or make note on the previous move in checklist?

Blake,
I think making a note on the original checklist is OK, with initials and date.

Originally posted by @Sharon Rosendahl :

The market in Mount Vernon will support almost anything reasonable. I work there and know that coworkers have difficulty finding rentals. 

I have a couple houses in the Oly Penn. There are few rentals available there too, particularly where ours are. We charge first, last and damage deposits. I considered doing a non-refundable portion but feel that it is my problem to shampoo carpet after a tenant leaves (I actually own a pretty heavy duty cleaner). Unusual damage would be paid by the damage deposit. 

I charge a $350 non-refundable pet deposit since I feel at the very least I will have extra cleaning such as a professional carpet cleaning to make sure dog/cat hair is completely removed and even a faint smell is gone. I've also had yard damage (even good dogs can affect your grass and shrubs). I also charge $35 pet rent.

Never rent to friends. I had an employee that I rented to. Cost me $10k and I almost had to evict her too. Luckily, she left on her own and in about 9 months (I normally did inspections once a year. I now do them every 6 months). The fact that these friends are just assuming is not a good sign. They may also assume that rent is optional. How are you going to handle lease violations? What if they don't let you inspect? 

Another bad story about friend/tenants. So we bought a house out in the oil field boom area while we were working there. We had some friends who wanted to find a different place to live but they needed to wait for the landlord to give them back their deposit. We agreed they could move in while they waited for the deposit and then they would look for a rental. It was hard to find housing back then. We set a deadline about 3 months in the future and agreed to a minimal rent. Apparently maid service was supposed to be part of the rent. They also bought one of our minor children alcohol without asking us.  They also taught him to drive, without a permit. Then they decided that they had paid us enough rent so didn't want to pay anymore. Hubs had known this guy since elementary school. My husband was back home and had a serious accident and we chose to move back to Oregon and sell the house in North Dakota. We told them they had to leave since we were selling the house but said that they got first shot at buying it. They couldn't finance it and we couldn't carry so they were pissed at us. My husband lost a friend from elementary school over this.

My niece and nephew have a similar story. 

PM me what you are renting and how much. I think someone at work is still looking for a rental.

 Hi Sharon thank you for sharing all of that! My wife told them they can move in, but i told her to tell them that even though they are friends, that I run this as a business, and will not give them any special treatment becuase they are her friends. I had her place the blame on me since i dont care what they think of me, it is my business! its in a duplex that we owner occupy the other half as well, so we will see how this goes... If they fall through i will message you details, we are meeting with them Saturday! 

@Blake King

Most def handle it like you would any other business transaction complete with background/credit check. Make sure to set a late fee and stick to it. I have due by the 5th then $25 per day late fee. I had a tenant pay me a month late complete with all late fees. They now pay about the 28th to make sure they get it in. Tenants who are a day late will appreciate they aren't hit by a huge fee and it gives late payers an incentive to pay sooner rather than later.

@Blake King so you’re saying 300 dollars non-refundable plus 900 dollar refundable (so 1200 total?, and 900 is a security deposit?). Then on top of that an 800 dollar security deposit for a small dog?

Or was is 300 non-refundable plus 900, plus 1200? Sorry it’s not immediately clear to me which it was.

Either way, as a landlord and a tenant, I would never rent from you and I bet a punch of people feel the same way. You’re asking for minimum 1200 “deposit”, 1200 rent up front (obviously) and another 800 deposit. So that’s 3200 to move into a 1200 a month rental. Is that normal in your market? Around here you’d be vacant for a while because no one else does that.

That stuff is pretty standard except the 800 dollar pet deposit, that’s nuts.

Hi @Caleb Heimsoth looks like it is a little high for the area, but not outrageous. Will be lowering the pet deposit to $300, $100 as a cleaning fee, as well as not taking away the nonrefundable fees. That’s the plan I think! 

All my rentals are in MV and the only non-refundable fee we charge is for carpet cleaning. I expect the place to be returned in perfect condition so that we don't need any more fees collected. And if I need to charge for more work to be done or from their damages, I take it out of the refundable deposit. They are given a price list at the beginning so they know my cleaning rates and how much I'll charge for everything when they leave it in poor condition.

Not true - we also charge a large non-refundable move-in fee but it is changed to refundable if they stay 12 months or more. It is because we do month to month agreements only - but that's a different subject.

Regarding pets, I never separate a "pet deposit" from a regular deposit. If there are pets involved I just charge a larger regular deposit. I don't want to fight over whether the damage was from the pet or not, or if they get rid of the pet and want the money back mid-residency. It's just deposit.

WA Landlord-Tenant law does not allow non-refundable damage deposits. If you want to charge a fee then you have to call it a fee. Cleaning fee for example, or a pet cleaning fee. If there is no damage, you may not keep any damage deposit. 

@Blake King I rent to a friend and there has been no issues. Extremely responsible, he hasn’t had any issues we needed to fix, and as long as I’m a responsible landlord, this won’t cost us a friendship.

However, I was a irresponsible young adult renting from friends 10 plus years ago. Paid late a few times, but never broke anything in the house, or cause any trouble for them. I am still friends with those people because I respected them and understood that it is their house and they always got their rent. These “friends” sound like they’re just ****** people.

@Blake King

Yes renting to friends and family can backfire.  I have rented to friends with no problem.  As far as non refundable deposits v. Fees it’s all based on your state law.  In our area, I cannot charge a move in fee as well as a security deposit (Security deposits are limited to two times the rent).  You must pick one.  Normal wear and tear is typically the landlords responsibility.  I do charge a pet fee and additional $25 per pet as additional rent. It is typical when someone moves they must pay first months rent plus a security deposit.  I always make sure the security deposit is a different amount then rent so there is no misunderstanding that the security deposit is not the last months rent.  Example would be rent $1400, security deposit $1300, pet fee $250.  Total cost $2950.  Funds must be paid via cashiers check.  After the initial fees are paid they will pay through direct deposit (ACH). 

I keep my deposit and rent the same, if I rent at $900 per month then that is my deposit too. Then pet deposit on top of that but it is all non refundable. $1800+ pet.

If someone in my market can not afford the upfront expense their out of luck as I want to attract people who can afford the lifestyle they want to live.

@Blake King be clear that you are charging a fee and be clear on what the fee covers. It is difficult to charge a cleaning fee, then deduct cleaning from the deposit. There will be an expectation that the fee covers cleaning, so the tenant may not clean. If you try to take that cleaning expense from the deposit, the tenant will just argue that you already charged them in the cleaning fee. 

My opinion, cleaning and damages should always be under a deposit. Charging a cleaning fee either assumes it will be dirty or it is just an extra money maker.

Another option is to rename the fee something different. Call it a move-in fee or lease signing fee. This removes the connection to cleaning and still allows you to deduct if they do not clean.

"non refundable damage deposits more specifically."

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Your statement makes no sense. You can't have a non-refundable deposit for a future event that might never occur. You can have a damage deposit -- refundable if there is no damage. You can have a cleaning on move-out fee, because there will be a move out and there will be a cleaning. But a non-refundable fee for an event that might never occur? Nope. You run the risk of being tagged for false advertising of what your rent rate truly is.