What Can You Do If a Tenant Cannot Immediately Move In to Your Rental?
Sometimes, after agreeing to rent your unit to a tenant, you will find that they cannot move in immediately. In this situation, you may be allowed to ask the tenant for a holding deposit. A holding deposit is a deposit to hold the rental unit for a stated period of time until the tenant signs the lease and pays the first month’s rent and security deposit. During this period, you as the landlord agree not to rent the unit to any other renter. If your tenant later changes their mind and decides not to move in, you may keep at least some of the holding deposit.
When you charge a holding deposit, you should think about the following questions:
Do you want the deposit to be applied to the tenant’s first month’s rent? If so, you should have a written document stating this. Applying the deposit to the first month’s rent is a common practice.
Do you want to refund any part of the holding deposit if your tenant changes their mind about renting? The amount that you can keep usually depends on the costs you have incurred due to your tenant backing out of the agreement, such as advertising costs or lost rent if a new tenant cannot be found in time. It is good practice to state in writing that the holding deposit is not refundable.
Please note that a holding deposit merely guarantees that the landlord will not rent the unit to another person for a stated period of time. It does not give your tenant the right to move into the rental unit. The tenant must first pay the first month’s rent and all other required deposits within the holding period. Otherwise, you can rent the unit to another person and keep all or part of the holding deposit.
As a general rule of thumb, you should keep good records of everything. This includes all deposits and rental related receipts (for repairs or anything else). It’s also smart to put all notices and communications with your tenants in writing.