Should I pay a deposit despite a weird clause in the application?
April 19, 2011 7:40 PM   Subscribe

I'm renting an apartment in Denver, CO, and the property manager is asking I pay a deposit in the form of a money order mailed to his address or delivered to the onsite manager to hold the apartment. I've checked the property out with the onsite manager, and it looks great. Worryingly, the application says that if offered the apartment and I refuse to sign the lease, the deposit will be kept. Is this normal, and is there anything else I should be worried about?

Here's the actual phrasing: "I (we) hereby make application for occupancy of the described apartment unit in the terms specified.
The deposit money accompanying this application is to be refunded immediately if application is not approved.

If this application is approved, I (we) agree to enter into a Agreement of Lease for the apartment unit terms and rental as outlined
herewith. If I (we) refuse to enter into an Agreement of Lease when offered by the management, or if occupancy is not taken within 5
days after the occupancy date indicated, the deposit made shall be retained by the management.

At the time the Agreement of Lease is executed the application deposit made herewith will be applied to and become a part of the
Security Deposit in accordance with the terms specified therein. The balance of any Security Deposit, the first month’s rent and any
miscellaneous fees will become due at that time."
posted by speedgraphic to Law & Government (15 answers total)
Is this above and beyond an application fee? How much is it?
posted by inturnaround at 7:49 PM on April 19, 2011

Response by poster: The application fee was $35, and the deposit is $500, although this would (apparently) be rolled over into the actual deposit for the apartment (which is also $500).
posted by speedgraphic at 7:52 PM on April 19, 2011

They are asking for what is commonly known as earnest money or a holding deposit. Check with your local tenants rights org to find out the maximum amount allowed in your city/state and if there are any requirements for the landlord to return a portion of the holding deposit if they are able to find another tenant within a specific time frame.

Asking for earnest money on a lease is not at all unheard of, especially in areas where the rental market is tight. The amount is usually rolled into the security deposit.
posted by jamaro at 7:58 PM on April 19, 2011

A provision like this was present in the lease for my new apartment (here in Philadelphia). I can't remember if it was in previous leases of mine.
posted by midatlanticwanderer at 8:30 PM on April 19, 2011

I hadn't previously seen that until I looked at a rental application for my sister a couple of weeks ago. The difference being that either party could terminate the process and she'd get her $300 back. I guess in her case it was more to show that she had the money available and was serious about being denied the use of it for a while than making sure she went through with the rental.
posted by wierdo at 8:43 PM on April 19, 2011

What neighborhood is this? I've never had to pay earnest money in Denver, and $500 seems steep. There are lots of places looking for tenants.
posted by freshwater at 8:47 PM on April 19, 2011

Response by poster: This is in Capitol Hill. There's tons of studios for rent there, but most of them are either in shit condition or don't allow cats. I really want to live as close to the mall shuttle as possible as I work downtown (this one is only six short blocks away) and completely eliminating my work transportation costs is extremely tempting.
posted by speedgraphic at 8:54 PM on April 19, 2011

A lot of apartments we looked at here in TN had similiar paperwork.
Sometimes it was called a "reservation fee" or "hold fee"... other times it wasn't really called anything but a deposit.
The one we ended up renting said we would get half of our deposit back if we backed out.
My understanding is that it means your serious and not wasting their time on application process/background checks and losing other potential renters who would be interested during this time.

We hardly have tentant rights/rules where we live but you might. I would see if there's one available online.
posted by KogeLiz at 9:00 PM on April 19, 2011

Sounds like a normal holding deposit to me. If you want to live there, it's probably not anything to worry about.
posted by J. Wilson at 9:07 PM on April 19, 2011

I live in that neighborhood, and have rented several apartments in Denver, but I've always just paid a deposit, which sounds a bit different than what your new landlord is asking for. You might want to contact the Renters with Benefits program at New Era Colorado -- they might have a better idea as to how kosher this is.
posted by heurtebise at 9:45 PM on April 19, 2011

I'm a property manager in Syracuse and I do this. I have a Deposit to Hold form that is filled out and signed by tenant and agent - we promise to not rent the property to anyone else and to make any specified improvements, and they promise to move in by a certain date and pay the rest of the money and sign the lease or they lose their deposit.

They are free to not give a deposit, in which case we keep marketing and showing the apartment and if it is still available they can move in. Frequently when they call me back the apartment is rented.

So, if you want an apartment for sure, you risk losing money if you change your mind. If you want to shop around, you risk losing the apartment.
posted by Melsky at 4:57 AM on April 20, 2011

I'd move on. Them wanting to keep your 500$ if you change your mind while your application is being processed is ridiculous.
posted by zombieApoc at 5:52 AM on April 20, 2011

*assuming that you were approved and then let them know you no longer wanted it... yada yada...
posted by zombieApoc at 5:53 AM on April 20, 2011

This seems normal to me. Isn't this what a deposit is for? This way if they pass on other tenants and you change your mind they have something to show for it. Seems perfectly fair to me.
posted by saltykmurks at 9:00 AM on April 20, 2011

Nthing most of the people here: this is how they are assured that you are serious about the apartment. If you don't think you are very serious about committing then don't pay the deposit, like pretty much any other deposit you've ever put down. From your excerpt, the terms seem very reasonable.
posted by dozo at 9:19 AM on April 20, 2011

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