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lori6171

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Posts: 3
Reply with quote  #1 
We have renters that signed a contract and gave us $500 security deposit to hold the rental.  They want out of the contract that starts in 2 days and want their $500 deposit back.  My question is do we have to give back the $500 and can we hold them to paying the rent until we find new renters?

We did not put in writing that the $500 was given to hold the place and that it was not refundable.  They are also telling us that we did not sign their copy of the contract.  Our copy has both their signature as well as ours.
OHlandlord

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Posts: 3,809
Reply with quote  #2 
You have a signed copy of the lease.  You can produce that for them if need be.  It doesn't really matter if their copy isn't signed by you.  The fact is, your copy is signed by them.  That's what is important.

The holding fee usually holds the rental until the lease is signed.  (It should also say it is non-refundable- make sure it does from now on.)  Now that the lease is signed, the holding fee should convert to the deposit.  Does your paperwork say this?  Have they paid the first month's rent or any other money?  What did you write on the receipt for the $500 that they gave you?

Personally (unless your answers from the above questions are contradictory to basic practices) I would tell them I am sorry but we have a signed legal contract.  The holding fee converted to a security deposit once you signed.  I would tell them that I willl dilligently attempt to re-rent the unit as soon as possible, but since they are breaking the lease, they will be responsible for rent until I could re-rent it, advertising fees, agent fees (if you go through a realtor to find a tenant), etc.  Then subtract these amounts and send them back the rest with a full accounting from that deposit within your state's time limit.  You lost other possible tenants when you took this off the market to hold for them and when they signed a lease.  They owe you for that.
lori6171

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Posts: 3
Reply with quote  #3 
Thank you for your response.  We did not include anything in the contract about a holding fee.  We did write in the contract that there would be a security deposit of $1350. We verbally told them when they signed the contract we needed $500 of the deposit upfront to hold the rental.  We did not give a receipt for the $500.  We do have a photo copy of that check.

They are also saying the contract is not valid because the contract says "This indenture of lease was entered into this      26    day of October ­­­2007, by and between...(that is the day the rental is available for them to move in).  This contract was signed on Oct 2.  There is another section in the contract that says "term of this Lease shall be for a period of 6 months from October 1, 2007 to March 31, 2008." 
 
 
OHlandlord

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Posts: 3,809
Reply with quote  #4 
They're trying anything they can to make you think the lease is not valid. If they signed and dated the lease (even if it was signed before the day they were to take possession) it is a valid contract.

I would just send them the notice stating that you have a partial deposit on the rental which will be retunred within the state's guidelines, minus the expenses I listed previously.  Keep track of advertising, how long it takes you to rent it (prorate the month's rent until someone takes over), etc.  Then send them an accounting of deductions from the SD.  If the charges are more than the SD(which they may be since you have only a portion of one month's rent for deposit, send them a bill ofr the rest with the accounting.  Make sure you mail that accounting to their forwarding within the state's timeline.
lori6171

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Posts: 3
Reply with quote  #5 

Thank you soooo much!  You have been so helpfull in our first time attempt of being landlords.  Meanwhile, we have joined a non profit landlord association in our state that is providing us with correct forms and unlimited advice.  I'm so glad there are people like you that take the time to help others.  Thank you again!

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