Re: Deposit to hold up property and mutliple applicant

Re: Deposit to hold up property and mutliple applicant by NY-LL on June 13, 2012 @17:35

The “security deposit” (which should be a rental binder) does not have to be refunded if proper protocol is followed. The actual security deposit to ensure against non-payment of rent and property damages, which is not the rental binder, must be returned to the tenant prior to move-in, if tenant never occupied premises and post move-out (if tenant does not owe for rent or damages).
-- See LPA Rental Binder http://www.thelpa.com/free/rental.pdf

The property owner should only accept a rental binder prior to lease signing.
The rental binder is used as a holding fee and is converted to the first months rent upon approval of the rental application. The rental binder is refundable within a specified period of time (generally 5-10 business days) provided the rental application has been approved, but the lease agreement has not been signed. The rental binder is non-refundable provided the rental application is approved and the tenant requests cancellation of the rental application past the specified time period and, definitely, after the lease agreement has been signed.

The State of California allows the property to collect a maximum security deposit of two months rent.
In order to manage otherwise qualified tenants with stable (5+ years) employment and substandard credit or non-local references, consider collecting one months rent, two months security, and/or last months rent (without regard to the prospective tenants credit and references).

Note for California: The security deposit may be called "last month's rent," "security deposit," "pet deposit," "key fee," or "cleaning fee." The security deposit may be a combination, for example, of the last month's rent plus a specific amount for security. No matter what these payments or fees are called, the law considers them all, as well as any other deposit or charge, to be part of the security deposit.

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Re: Deposit to hold up property and mutliple applicant by Adale (CA) on June 13, 2012 @18:00	[ Reply ]

Thanks for answering question. But "The property owner should only accept a rental binder prior to lease signing." doesn't fit in my case. My case is: "lease signed, but tenant canceled before move in", will the "security deposit" refund to tenant? If both "rental binder" and "Security deposit" doesn't apply to this period, how to cover this case?

Re: Deposit to hold up property and mutliple applicant by Jake on June 13, 2012 @19:13	[ Reply ]

You need to refund the money and then back up and get better organized for next time. What did your lease say about the deposit? It did not say you could keep it in the event of a cancelation. If it did you would not be here with that question. Where did you get your lease? Was it something free from the internet that you modified? This is where many landlords get turned around.

Re: Deposit to hold up property and mutliple applicant by NY-LL on June 13, 2012 @19:35	[ Reply ]

In this particular case, the tenant would be technically obligated for the full term and conditions of the signed lease agreement. The court will require the landlord to mitigate damages and find a new replacement tenant within a reasonable amount of time. The court does not usually obligate a defaulting tenant to more than two months in damages to compensate for landlord rent loss. In the future, the landlord should collect the entire financial obligation from the tenant prior to lease signing, including the entire first month’s rent and full security deposit. The full financial commitment should ALWAYS be provided by the tenant prior to lease commitment. The “security deposit” (which should be a rental binder) that the landlord collected would be applied toward the first month’s rent, as there are no property damages because tenant did not move-in or take possession of the premises.

Re: Deposit to hold up property and mutliple applicant by Anonymous on June 14, 2012 @01:57	[ Reply ]

From what I understand in CA, and it was posted her a few months ago, the security deposit is NOT to be used as last month's rent, because it's SECURITY deposit.