When you are trying to find a new rental, you have the option of paying the landlord a holding deposit. This money secures your interest in the property.
You would pay this upfront to the landlord when you express your interest in the property. It can be beneficial to you, especially in a competitive rental market.
What it does
The holding deposit requires the landlord to take the property off the market and hold it for you until he or she processes your application and until you sign a rental agreement. You can also use it to hold the rental until you can move in if you cannot move in right away.
Where it goes
If you do not get approved to rent the unit, the landlord must refund the whole holding deposit back to you. If you do get approved and plan on moving in, you can either apply it toward the deposit or your rent for the first month. Some landlords will also refund the money.
If the landlord approves you and you decide not to rent, he or she may retain the deposit or a portion of it. This is because you took the landlord’s property off the market and that took the time he or she could have been looking for someone to rent it. You can avoid losing money by getting an agreement with the landlord that outlines what will happen with the deposit in varying situations.
Make sure you get a receipt when paying the holding deposit. You should have some written agreement saying what the deposit is and how it applies to protect yourself. If the landlord takes a deposit and rents the unit before giving you the chance, you may also have the ability to take legal action.