The search is over and you have finally found your next rental property to call home. You pay your future landlord a hold deposit to reserve the property and are just about ready to sign the lease when you receive a notice. The landlord has decided not to rent to you, but instead has decided to sell the property. Can the landlord legally keep your hold deposit despite being at fault for backing out of the deal?
When it comes to any disagreement between a landlord and a tenant, a complicated situation can arise quickly and often money is on the line. Like most legal situations, it is advisable to consult with an attorney, but often, the money in question may be less than what you would end up paying in attorney fees. This is frequently the case with hold deposits.
A hold deposit is an amount of money paid by the tenant to the landlord in order to reserve the property until the tenant is able to move in. This type of deposit is often used when a tenant finds a property they like but are unable to move in right away. When the lease is finalized and the rental period begins, the landlord then must use the holding deposit to put towards rent or a security deposit.
In the event that the tenant chooses not enter into a rental agreement with the landlord, the tenant forfeits his or her hold deposit. In other words, the hold deposit is meant to protect the property owner from any loss sustained from taking the rental off the market if the tenant fails to follow through with the rental.
It is evident then that the landlord does not have the legal right to the hold deposit if he or she terminates the hold. There are a few exceptions, however. Any time a hold deposit is made, the landlord and tenant should both sign an agreement. This agreement should list any and all reasons the landlord would keep the deposit. If the agreement were to include a stipulation stating “the landlord should keep the deposit should the property move from rental to sell”, then by all means, yes the landlord can keep the deposit. While each case differs individually, in the majority of cases, if a landlord decides to terminate a hold and instead sale the property, the landlord cannot legally keep the hold deposit.
Stephen K. Hachey, a Florida real estate attorney, can help your wade through this process and determine a positive solution. Contact him at 866-200-4646.
The opinions in this post are solely those of the author. The author takes full responsibility for the content. Like all blog posts, this is offered for general information purposes and does not constitute legal advice.