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Is Non-Refundable Holding Fee Unreasonable?
by Anonymous
on April 21, 2015 @10:40
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Is it unreasonable to charge a non-refundable holding fee (one months rent) to hold the house for four or five days till lease signing and move in? From application approval to actual lease signing and move in will take me 4 or 5 days to have the SFH completely ready for move in.
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Re: Is Non-Refundable Holding Fee Unreasonable?
by Garry (Iowa)
on April 21, 2015 @12:32
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I do it the way anon and Jannie do it. They fill out the app, I process it, and if I approve of someone, I call them up, and tell them they have 24 hours to meet with me, bring the deposit in cash or money order (equal to 1 months rent) and sign a lease at that time. The actual "rent" is not due until whatever we agreed to on the lease would be their move-in date. I tell the prospective T that we don't have any legally binding agreement until we have a signed lease by both parties and money has changed hands. I am free to look for another T and they are free to look for another place to live. I pro-rate the 1st months rent only, if need be, to get the full rent always due on the 1st of each month. I require the deposit, rent, and the utils put in their name before they get keys to the place. On my leases there is a place for a lease signing date, and a lease move-in date. They do not have to be the same date. Only a really dumb T is going to give you a deposit equal to a full months rent, and walk out the door with out a signed lease in hand.
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Re: Is Non-Refundable Holding Fee Unreasonable?
by anon
on April 21, 2015 @12:55
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You want to charge 1 months rent for YOUR taking 5 days to get the house ready???? No, you can't. Use the rental binder form with a small deposit that will be credited toward first month's rent.
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Re: Is Non-Refundable Holding Fee Unreasonable?
by Joel
on April 21, 2015 @15:11
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This is a simple item that could have been decided and agreed on in your lease.
It's kind of hard to spring things like this on the tenant after the fact if you weren't up-front about it.
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Re: Is Non-Refundable Holding Fee Unreasonable?
by John Brayton (Massachusetts)
on April 21, 2015 @16:07
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To clarify, are we talking about a fee or a deposit?
A holding deposit that converts to a security deposit upon move-in is perfectly reasonable. I recommend this, and I recommend making it non-refundable in the event that the tenant fails to sign the lease agreement, move in, pay first month's rent, etc.
A "fee" is not at all reasonable. It may not even be legal. I doubt this is what you meant, but be sure to use the right terminology when communicating with tenants about it.
John
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A fee must be a reasonable reflection of your cost
by CCRider (CA)
on April 22, 2015 @00:39
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A holding fee is just a fee for holding a rental, without showing it to anyone else, for a specified time, while the tenant decides if they want it.
A reasonable amount would be what the rent would have been for that time period, for instance.
If the tenant moves forward with the rental, the amount is usually credited toward their rent or deposit.
If the tenant backs out, it is not refundable.
A month's rent to hold a unit for 4 or 5 days is not reasonable.
Any fee for you to get the place ready prior to an agreed-upon start date of a lease is also not reasonable.
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Re: Is Non-Refundable Holding Fee Unreasonable?
by Anonymous
on April 22, 2015 @11:33
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A delay between qualifying a tenant and the actual lease signing/move in day is not unusual, and the reason for it doesn't matter (so you list of cleaning, which seems to have everyone confused and upset is a non-issue).
Any time there is a delay between qualifying a tenant and lease signing, you should collect a holding fee to protect your position. As you point out, no holding fee means the tenant and landlord can walk at any time.
If you use a lease instead of the holding fee, you must be very careful to identify the "effective date" of the lease as the day of signing, not the day of move in. Without that, if the tenant cancels before move in, the lease is not yet effective and you have to return all money collected.
If you DO have the lease effective date identified as the lease signing date, then if the tenant doesn't move in or attempts to cancel, they are bound by the terms of the lease and must pay the rent and all costs of re-leasing (utilities, new tenant fee if you use a PM) until you have secured a new tenant. You can take these "damages" from the SD.
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