Ask Twitter: Non-refundable deposits on rentals, an expensive lesson to learn

The two young women who showed up with checks to rent the third-floor apartment in our building seemed nice. My husband, who is the caretaker of several apartments his family owns, took their checks, had them sign the lease, and expected to see them back on June 1 for their move-in date. He turned away two other seekers and went to bed happy.

The next morning at 7:30am, one girl's mother called. She was practically crying, and started in on a long story with me about how her daughter was in over her head, couldn't afford the apartment and needed her check back. And this was just in twenty seconds until I could hand the phone over to my groggy spouse. He held back from completely blowing his top, but was not exactly yielding about returning any money. The point of a security deposit to hold an apartment is to take that apartment off the market and seal the deal. The custom to make that money non-refundable is a safety mechanism.

What these girls did could have turned out to be an expensive lesson for them. But instead, it turned out to be an expensive lesson for us. My husband ended up giving them back their money and is still trying to rent out our open place.

Would you have given the money back? I turned to Twitter for some advice.

Realtor Maya Paveza (@mayaREguru) told me, "As a human being I would have done what you did, as a Realtor a contract is a contract, the girls (assuming they were over 18) had every opportunity to review the document, bring it home to a parent and bring it back. Too often people claim they made a mistake and shouldn't be penalized, but there are always two victims in a situation like this."

Diane Guercio (@heyamaretto) told me that for her, the decision professionally would depend on the wording of the contract. But personally? "I would be inclined to keep a portion of the deposit. It is unreasonable to expect that someone else should be responsible for your mistakes. But perhaps this is a blessing in disguise. It would not have been as easy once the girls had moved in- and then run out of money. You may have ended up losing quite a bit more."

Paveza adds, "It's a tough lesson to learn on both sides, to the Tenants: Read the lease before you sign it and make an informed decision; to the Landlord: Continue to show the unit until you are 100% certain the tenants are moving in, even if you receive a cash deposit, a back-up offer is never a bad thing to have."

The irony of the situation was that the morning this all started to transpire, I was on ABC in New York talking about tips for renters to negotiate a better deal.

My husband considered this sort of like treason, and half-expected apartment seekers to come armed with my tips that day. But I think that my most cogent advice was to be reasonable. Negotiations are, after all, about two parties coming to an agreement, not one party getting something over on the other. You make trade-offs, you ask for deals on your rent in exchange for something else -- sometimes that can just be the promise to be a good tenant.

Increase your money and finance knowledge from home

Advice for Recent College Grads

Prepare yourself for the "real world".

View Course »

Introduction to Retirement Funds

Target date funds help you maintain a long term portfolio.

View Course »

Add a Comment

*0 / 3000 Character Maximum