Holding Deposits

Discussion in 'Landlord & Rental Property Questions' started by Rainman, Nov 24, 2014.

  1. Rainman

    Rainman Senior Investor

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    Say a tenant is looking for a house but has no intention of moving in, you can demand that they pay a holding deposit to prove their seriousness. The deposit also to act as a safeguard that whilst they are gone, you won't rent the house to another tenant who may be interested in it. Now supposing the person who paid the holding deposit didn't turn up at the agreed time or they didn't turn up at all, should you refund their money when they "surface" eventually?
     
  2. Gelsemium

    Gelsemium Senior Investor

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    If they are paying for something and they didn't do what was agreed I don't see grounds for a refund except in special circumstances. We could have made other deals meanwhile right?
     
  3. ally79

    ally79 Guest

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    If they don't move in at the agreed upon date I would think that the security deposit would not have to be refunded. I am not a lawyer though so you should probably consult one if you have had this happen to you.
     
  4. dianethare

    dianethare Senior Investor

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    This is the first time i have heard/read of such a term...i don't think i 'd want my agents to mix themselves in such...it looks quite confusing and might bring in some scuffles at a much later date...:(
     
  5. Gelsemium

    Gelsemium Senior Investor

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    I actually thought this was something very common, tenants have to leave a deposit and if something is wrong they lose the right to it, quite simple no?
     
  6. Determined2014

    Determined2014 Guest

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    Well it depends on the period off time that they have been gone for, let us say they give it to you to hold the house yet they are gone for a month then, you definitly can not refund them, because that covers for the rent that they should have stayed there, so there is no refund that they will be getting back.
     
  7. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Have it all spelled out clearly in writing ahead of time and have them sign it and keep a copy.
     
  8. healthandfitness

    healthandfitness Well-Known Member

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    If you are collecting a "earnest money" from a prospect, this needs to be under a contract that has all of the particulars outlined, and any contingencies properly noted. This will eliminate confusion on each parties part.
     
  9. crimsonghost747

    crimsonghost747 Senior Investor

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    Common sense states that if they didn't do their end of the bargain, you keep the money. I mean... that is why you got the deposit in the first place, no?
    Just make sure that it's written down properly so there won't be any legal problems.
     
  10. Kate

    Kate Senior Investor

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    Legally I don't really know how this would be handled, *but* I suspect that if it was a holding fee and the prospective tenant didn't keep up their end and move in, I'd put up a big fuss about having to refund it. I don't think that's the purpose of a holding deposit.

    I'm also thinking that in the time they were pulling me around waiting, I could have found a good tenant who'd already be moved in and paying rent. Whatever kind of contract or written agreement you have drawn up for this, just be sure to add the fact that a holding fee (or whatever you're calling it) is non-refundable if they back out. No reason the landlord should lose income waiting around.
     

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