Does your potential landlord want a holding fee to reserve the apartment? Are you worried you might not get the apartment, and also lose the holding fee?
These are common concerns, and we are here to help you figure them out
.Is Apartment Holding Fee Refundable?
The biggest concern on a tenant’s mind is whether they will get this money back. Well, you can put your mind at ease, since the landlord has to refund the holding fee if they do not choose you as a tenant.
However, there are some situations where the landlord can refuse to pay back the holding fee.
Here are these situations:
Backing Out of the Deal after Paying Holding Fee
Landlords can lose many potential clients while they run background checks on you. This is why they ask for a holding fee as security, so they may reserve the apartment for you while they run checks.
This also works in your favor since you won’t lose the apartment to other people waiting in line.
However, if you back out of the deal after paying the fee and after the landlord accepts your application, the holding fee becomes non-refundable.
This will only give the landlord a reason to keep your holding fee since you wasted their time and effort.
Hence, it is crucial to look at all corners of the property and go through the lease extensively before paying the holding deposit.
Lying or Hiding Information
Once you send in your application, the landlord will run a screening check on you. This is done prior to paying the holding fee.
These are regular checks to ensure you will not become a liability, and will pay the rent on time while also taking care of the property.
Many applicants worry that the landlord may not accept their application, so they lie in case they have a bad credit score or are not on good terms with their previous landlord.
This can cause a lot of damage since the landlord will have access to all the information through a simple background check.
It is better to be truthful and open about your circumstances. Many landlords empathize and will accept your application. However, they may have conditions to ensure some safety for themselves.
Also, any information they are unsatisfied with gives them the right to refuse you as tenants. However, in such a case, they will have to give you back the holding fee.
That said, if it’s found that you have lied about important information, the landlord will not only refuse your application but will also keep your holding fee.
Remember, always pay the fee after the background check is done. This saves you from the risk of giving up your holding fee.
Furthermore, if you pay it before the screening, add it to your agreement, so there are no arguments over returning it later.
Is Paying a Holding Fee Mandatory?
Landlords have the legal right to ask for a holding deposit from their potential tenants. However, you should only hand over the money if you are completely satisfied with everything.
You must check under what circumstances your holding deposit will be returned, and which conditions will mean they keep the fee.
This will require a written holding fee agreement. Keeping things official will help both parties, and you will not have to worry about the landlord keeping the holding fee unfairly.
The agreement will contain details about every situation, so both parties will have to play by the rules, whether you rent the apartment or not.
Some details you should mention in the agreement are:
- The official name and signatures of the potential tenant and the landlord.
- The amount of the holding fee agreed upon.
- The apartment address
- The condition which will require the return of the holding fee
- The conditions which will not require a return of the holding fee
- The date the tenant moves to the apartment
- The amount of rent agreed upon (monthly or yearly)
You may also add other details if both parties find it necessary.
Remember, if the landlord violates the agreement, you may take them to the small claims court and demand a return of the amount you have the right to get back.
This legal requirement is necessary, and you should only move forward with an application if the landlord is willing to sign the legal document.
In order to secure your holding fee, you should ask yourself some questions to ensure everything is in place, and there is nothing that might hold you back from making a deal after paying the holding fee.
- Have you passed the screening criteria and background check?
- Are there other people the landlord has asked for a holding fee to secure a position?
- Have you gone through all the lease terms, and do you feel satisfied with them?
If you are still unsure about the property, it is better to have a second look or ask for a loved one’s opinion.
Renting an apartment can be a huge deal for some people, and in case you feel doubtful, you can always back out before you pay the holding fee.
Getting Assistance from Rental Program
Some tenants apply for apartments through assistance from rental programs. These programs require the tenant to report the apartment they want to rent.
The management of the program then sends an inspector who checks the property and decides whether the tenant can rent the property or not.
Previously, landlords kept the holding fee when inspectors rejected the potential property. However, the changed laws now dictate that the landlord must return the holding fee to the applicant, since the rejection was not their fault in any way.
In case the inspection is not completed within 10 days, the landlord must inform the potential tenant that they may no longer hold the apartment. Also, they must return the holding fee promptly.
If the landlord does not return the holding fee immediately, in cases where the tenant is liable for a return, the landlord will be held accountable and will be fined twice the amount of the holding fee.
How Much Holding Fee Should You Pay?
Typically the holding fee for an apartment averages between $100 and $400. This amount depends on the agreeing parties as well.
They can mutually decide on an amount that they both agree with. The amount they decide upon must be mentioned in the terms in order to avoid any problems later.
The landlord usually decides on a fee that reflects the rent and worth of the property. However, you may negotiate and ask them to reduce the amount.
Based on your willingness to rent the property, they will likely reduce the holding fee.
The Final Word
The most basic thing you need to understand about the holding fee is that it differs from the security deposit.
With a holding fee, you simply pay the landlord to reserve the apartment for a particular time because of your interest in the property.
The holding fee is refundable in most cases. The landlord must return the entire amount, or the partial amount agreed upon in the legal documents, if the potential tenant is at no fault for backing out.
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