Author Topic: Tenant wants to back out 3 days after signing lease, nonrefundable deposit...  (Read 4640 times)

FrozenAssets

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Prospective tenant clears background check and wants to rent house starting May 1.  We agree to hold the property until May 1 with nonrefundable holding deposit that will convert to security deposit upon occupancy.  Rental/Pet/Security deposit agreements signed, we're happily thinking done deal.

Three days later tenant emails saying she drove the neighborhood to show her teenage kids the house and neighborhood, and that they don't like the neighborhood or schools.  Does she lose her deposit if she cancels the contract. 
I reply that yes, the deposit is nonrefundable should she not move in on May 1.

We do month-to-month rental agreements, so she could technically give notice that she will occupy for May, move out before June 1, and potentially get her deposit back less any damages. 

Do I continue to show this property and line up another tenant, maybe even prorate some deposit back (Compassionate side of me is burdened, this lady is getting divorced and obviously wishy washy on decision making skills...) or do I just let this play out, force her hand, and potentially have a cranky occupant that moves out quickly.  Part of the reason we do month-to-month agreements is to lose bad renters quickly, and allow people the ability to move fairly quickly and easily if they're dissatisfied or life circumstances change.  The deposit was $2400, so fairly substantial loss for her should she walk...

FerrumB5

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So if she moves in May 1st and moves out May 2nd - she will get her deposit back minus occupancy charges (per day or 1 month rent)? Then I say you are in worse situation than her. I'd let it go with no or minimal charges really

FrozenAssets

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So if she moves in May 1st and moves out May 2nd - she will get her deposit back minus occupancy charges (per day or 1 month rent)? Then I say you are in worse situation than her. I'd let it go with no or minimal charges really

No, she will owe rent for for May.  She has to give at least 30 days notice to move, according to the rental agreement.

PadAdventure

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the rent is separate.  Only if she gives notice on the first, pays for may, and then vacates.  Otherwise, too bad.  I have learned the hard way being a bleeding heart.  Remember, she was the one who made a commitment, you shouldn't have to now lose out because of her issues.  Sucks about the divorce, but you do your homework BEFORE you commit

Another Reader

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In many states the landlord has an obligation to try to re-lease the property.  Damages are limited to rent actually lost and extra costs to re-lease the property.  In your shoes, I would try to re-lease the property and follow your jurisdiction's rules on refunding deposits.  For example, if you obtain a new tenant also starting May 1st and it costs you $25 to advertise, your damage amounts to $25.  It's important to understand deposit law and follow it or you could end up in small claims court.

PadAdventure

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In many states the landlord has an obligation to try to re-lease the property.  Damages are limited to rent actually lost and extra costs to re-lease the property.  In your shoes, I would try to re-lease the property and follow your jurisdiction's rules on refunding deposits.  For example, if you obtain a new tenant also starting May 1st and it costs you $25 to advertise, your damage amounts to $25.  It's important to understand deposit law and follow it or you could end up in small claims court.

Very true, depends on the location, and I answered from a location-specific point of view.

Spitfire

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I would probably try to find another renter, and if I did find one to start May 1, give the money back. At that point you wouldn't have really lost anything.

FrozenAssets

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I've reread the local Landlord Tenant Act, relisted the property and will prorate the deposit back to her if I can get it rented prior to May 1.  Otherwise, as far as I understand, she is liable for the rent for April, if I'm understanding this correctly:

Quote
Once the tenant and the landlord make a rental agreement, the tenant may NOT have the right to get back full deposits or
prepaid rent if he or she decides not to move in.
In a month-to-month tenancy, the tenant is responsible for as much as one month’s rent, or prorated rent on a day-to-day
basis until someone else rents the unit, whichever is less. The landlord must make a reasonable effort to re-rent the unit
as soon as possible, at a fair rental price.25

Another Reader

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If the rental agreement was to start May 1, she is not liable for April rent.

robartsd

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I'd deduct actual costs you incurred to find her as a tenant (advertising and screening costs that you now need to repeat) plus 3 or 4 days rent (perhaps more - but you only lost a few days thinking she would be moving int) and refund the remainder of the deposit as soon as possible (to be kind to her - I'm sure she needs the money for a deposit wherever she ends up instead). If you're successful at finding a new tenant who will rent beginning on or before the last day of her prorated rent (which begins on May 1st), you can refund the extra rent she paid after the new tenant signs an agreement and paid their deposit. The same standard goes for if a tenant vacates before their notice period is up - if you are able to begin collecting rent from a new tenant you should refund the prior tenant for the overlap.

retiringearly

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I would tell her you will try to rent the place and if you can rent it prior to May 1 you will refund her money less any actual costs you incur (advertising expense, etc.).  That seems fair.

Cassie

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WE had this happen once and just gave them their $ and rented it to someone else. WE decided we did not want a tenant that did not want to live there.

lhamo

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It's April 1.  You have a month to find a new tenant.  Who could potentially move in even earlier.  I think as long as you can re-rent the place for occupancy on or before May 1, you should refund her entire deposit.  If it takes into May to find another renter, then pro-rating might be more appropriate. 

She's someone in the middle of a life crisis.  Do her a favor and generate yourself a bit of positive karma....

fishnfool

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It's April 1.  You have a month to find a new tenant.  Who could potentially move in even earlier.  I think as long as you can re-rent the place for occupancy on or before May 1, you should refund her entire deposit.  If it takes into May to find another renter, then pro-rating might be more appropriate. 

She's someone in the middle of a life crisis.  Do her a favor and generate yourself a bit of positive karma....

X's 2!

At this point you are not out any loss, find another tenant!

calimom

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It's April 1.  You have a month to find a new tenant.  Who could potentially move in even earlier.  I think as long as you can re-rent the place for occupancy on or before May 1, you should refund her entire deposit.  If it takes into May to find another renter, then pro-rating might be more appropriate. 

She's someone in the middle of a life crisis.  Do her a favor and generate yourself a bit of positive karma....

I have to agree. If it was an April 1 move-in date, there would be a problem. Dude, you have a month. Housing needs to be a good fit for all. If this woman and her family agree the house and location don't work for whatever reason, go with that. Best to find a long term tenant the house will work for.

undercover

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The problem is month-to-month. I'm sure you have good reasons for going month-to-month - probably because you want the option of moving back in at some point and you want to find the best fit for your property. Or maybe you just don't want anyone to get "too comfortable". But, realistically, it's always going to be a headache filling and dealing with technical details with everyone that comes and goes. Month-to-month rentals screams both "I'm not that serious about living here...especially long-term" and "I'm not that serious about renting this long-term"...so you have to expect some degree of flakiness from either party.

Personally, in this situation, even though I don't know when you agreed to the holding period, I'd still give her the full deposit back. It's not like you've legitimately lost much - if anything at all. You could probably keep a pro-rated amount of the deposit based on the agreed upon holding time, but I just don't know that I'd be that petty.
« Last Edit: April 02, 2016, 11:59:04 AM by undercover »

Cyaphas

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I've reread the local Landlord Tenant Act, relisted the property and will prorate the deposit back to her if I can get it rented prior to May 1.  Otherwise, as far as I understand, she is liable for the rent for April, if I'm understanding this correctly:

Quote
Once the tenant and the landlord make a rental agreement, the tenant may NOT have the right to get back full deposits or
prepaid rent if he or she decides not to move in.
In a month-to-month tenancy, the tenant is responsible for as much as one month’s rent, or prorated rent on a day-to-day
basis until someone else rents the unit, whichever is less. The landlord must make a reasonable effort to re-rent the unit
as soon as possible, at a fair rental price.25

I'd follow this to the letter. You should make a reasonable effort to find a new tenant within the 'month.' After personally being burned enough times; Do not, I repeat, DO NOT let other people make their problems, your problem! No good deed goes unpunished.

MsPeacock

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I would tell her you will try to rent the place and if you can rent it prior to May 1 you will refund her money less any actual costs you incur (advertising expense, etc.).  That seems fair.

This. Seems the simplest and least conflict ridden way to go. It has only been a couple days so you have plenty of time to find another tenant.

Bigsacks

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Re-rent, keep the deposit

that's business

PadAdventure

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Re-rent, keep the deposit

that's business

This is exactly how I FEEL typically.  It only takes a few times getting screwed by “other peoples” issues and problems to lose the bleeding heart mentality.  Due diligence before committing.

SwordGuy

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The problem is month-to-month. I'm sure you have good reasons for going month-to-month - probably because you want the option of moving back in at some point and you want to find the best fit for your property. Or maybe you just don't want anyone to get "too comfortable".

Or because if the landlord gets a problem tenant, they can give 30 days notice and the tenant is gone.   Then the tenant has no legal leg to stand on if they want to stay. 

Another Reader

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This has nothing to do with how the landlord "feels."  In my jurisdictions,  you have a legal obligation to make every effort to re-lease the property.  If you can't demonstrate that in a small claims action, you have not shown you tried to avoid or mitigate the damage and you will write the deposit refund check anyway.

kiwigirls

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I think you want to make sure that you are not out of pocket from this but you don't want to profit from her going through a life crisis. Sure you might reach FiRe a month earlier as you kept her deposit in full but at what cost to you personally.   Take what you need to cover your expenses in re-renting and any lost rent time (including April as you agreed to hold the place for her) and give her the rest back.

"Compassion is not religious business, it is human business, it is not luxury, it is essential for our own peace and mental stability, it is essential for human survival.” Dalai Lama