Security Deposit / Holding Deposit

[platinum769]

California

I put a security deposit down for an apartment $600.00. However, I did not put down a holding deposit to hold the apartment. The apartment was still being advertised on craigslist after the signed date. I signed the agreement on 1/9 (saturday). The company couldn't do anything until Monday (1/11). I was notified I was approved on Tuesday (1/12). I notified the company I did not want to rent the apartment on Wed (1/13). When I came to notify them, they did not return my security deposit check and said I'm liable until they can rent the apartment. After researching the terms of "security deposit" and "holding deposit", it is two different things according to California's Dept. of Consumer Affairs. I then, cancelled the personal check, and notified the company in writing that I cancelled the check. The company is now threatening to send me to collections if I don't pay the security deposit, plus a returned check fee (even after I notified them it was cancelled).

What can I do? Please help.

Agreement Form

The balance of the Security Deposit, in the amount of $600, to complete the full deposit payment of $600 is due on or before 1/16/2010. If the prospective resident gives management notice within seventy two hours of the date of this agreement that he/she does not intend to occupy the apartment, a full return will be made of all deposit monies paid. If the Application is not accepted by the management, the deposit will be fully refunded, but the credit check fee will not be refunded.

Applicant understands that once this Agreement is signed by the Applicant, and the holding deposit is received by Owner / Agent, the apartment will be taken off the rental market and reserved for Applicant, and other potential applicants will be turned away. If applicant fails to complete rental of said apartment on the agreed upon date, a charge of $36.50 per day will be charged against the “holding money deposit” as liquidated damages to include any days the apartment was held vacant for Applicant beginning with the day this Agreement was executed up until the day a new renter begins paying rent on the subject unit.

Prospective resident understands the security deposit tis to be held for faithful performance of the terms of rental agreement and not be used for any rent or other charges due. Management may retain all or any portion of this security deposit as partial or complete reimbursement for the following losses:
1. Cost to clean/restore apartment
2. Shampooing, drapery
3. Paint based upon a pro-rated scheduled if less than two years.
4. Damages to apartment other than normal wear and tear.
5. Cost to replace keys, furniture, gate passes, etc.
6. Unpaid late charges, delinquent rent, utilitiy bills, towing charges, or other charges owing at the termination of tenancy.

 

[Badbrains]

In your post you have outlined the language of the holding deposit but it does not specify how much the holding deposit should be if a renter wanted to actually hold an apartment during the application process.

Is there any language in the agreement you have not mentioned that says a holding deposit could/would then become the security deposit if renter completed a lease and moved in? You paid only one deposit not two.

It would seem than if any prospect renter who wanted to apply for an apartment, the holding deposit would come first and it would appear your $600 was the holding deposit.

Anyway, if you wrote a check for a deposit no matter what it may be called and then cancel the check without letting them issue a proper refund to you since you supposedly complied with 72 hour window, they most certainly may have the right to send it to collections along with the NSF fee if they were charged by the bank. You could always sue them for it and prove your case.

Good luck!

 

[platinum769]

There is nothing on the agreement that said my security deposit was the holding deposit.

Correct, I paid one deposit (security deposit). The property manager is now saying that my security deposit was the holding deposit. But at the time, I was not told this. Further, it was not stated on the agreement that the security deposit would become the holding deposit.

Do I have any recourse if the agreement did not specifically state that the security deposit IS/WAS the holding deposit?

 

[Badbrains]

Well it would appear this comes down to a terminology dispute. The holding deposit and security desposit may actually be the same thing. Has consumer affairs personally read your agreement, how did you gather your information.

You applied for an apartment, you left a deposit, and why would any landlord accept a deposit if they were not going to 'reserve' an apartment for you?

Do you pick out an apartment specifically that you wanted or were you on some kind of wait list?

The language in the agreement if written verbatim is unclear at best.

Needless to say you have no lost anything since you did a stop payment and they did not retain a dime from you. I am surprised they accepted a 'check' for $600, this was not a wise decision on their part.

What else can you do you but dispute it with the credit bureau or file a complaint, sue, or bad mouth them. It sounds like you have not lost anything since you placed a stop payment. Wait to see if you get a collection letter? Even then you have a right to dispute the claim with collection agency before they can hold it against you as the proof is on the LL that you violated the terms of your agreement.

You should at least pay the NSF fee, that was an unexpected expense to the LL, if they were charged.

Call the tenant's council in your area and see if you can get clarification.

Good luck!

 

[platinum769]

I agree that it's a terminology dispute, but the property manager sees it otherwise since I signed the agreement on 1/9 (Saturday), got approved on 1/11 (Monday - they couldn't process anything on the weekend), I notified them on Wednesday 1/13. Property manager says it was passed the 72 hours.

Glossary found on California's Landlord/Tenant Booklet:

holding deposit - a deposit that a tenant gives to a landlord to hold a rental unit until the tenant pays the first month's rent and the security deposit.

security deposit- a deposit or a fee that the landlord requires the tenant to pay at the beginning of the tenancy. The landlord can use the security deposit, for example, if the tenant moves out owing rent or leaves the unit damaged or less clean than when the tenant moved in.



I wasn't wait listed (i don't think), but the property manager never took down the listing on craigslist and continued to advertise the apartment. The day I came to tell them I don't want the place, there was two guys getting their credit checked for the place. She told me a day later they weren't qualified. I doubt they would admit to this if it ever went to small claims. (Isn't this a breach of contract, since the agreement stated once a holding deposit is received, it will be taken off the rental market?)

When I notified the property manager, I also wrote them a letter and informed them that I wasn't going to rent the place and also told them that I canceled the check. They still went ahead and cashed the check and now trying to bill me for $625.00. They sent me a letter requesting payment and advised me to pay the bill or they will send it to collections.

What if they have an in-house collections, wouldn't it be difficult for me to dispute it since they're working for the same company? Or if they use an outside collections agency, do they even care if I'm disputing it, since it's a terminology / unclear agreement?

Let's say they bring it to collections, will this automatically go on my credit report? What if I just end up paying the collections company, will it still be recorded on my credit?

Thanks for your help!

 

[Badbrains]

A couple things, look at the check that was issued as a stop payment, did you write on the check 'security deposit'. That may be your best defense in case it does go to collections and/or some sort of written notice and copy of receipt that acknowledged the office received your notice of cancellation. Keep the copy of the application that shows your written obligation as evidence as well to use later should you be contacted by a collection agency in writing.

You could also have a friend or yourself call up on a private phone and pretend to ask some questions about the application process like your interested in leasing an apartment. You go on to ask them, that you had a problem in the past with another community and lost your deposit and don't have money to throw around, and want to know the difference in their policy between a security deposit vs a holding deposit and see what there response is to see if you hear something different.

If they do have a collection company inhouse or not, they must notify you in writing and give you an opportunity to pay or dispute the debt, usually you have 30 days from the date of notice. Some credit agencies though do not follow the law on fair collection practices and they don't make an attempt to contact correctly it just lands on your credit and you are left cleaning up the mess. They have to show proof to a collection agency the debt is valid (ie, your application, your payment, correspondence, etc to place debt) They probably outsource this because they do not have time or have the patience to be debt collectors, and let the collection department take the fee for their services.

If you dispute it with them, also dispute it with the credit bureaus as well so is shows up as 'in dispute' on your credit. This way when people look at your credit they may look past it. It could however prevent you from leasing another apartment or you may have to pay a higher deposit because it even exists, unless you can show proof it was paid, etc.

Evictions and skips depending on local collection laws, check your state first, often can go on your credit immediately to prevent you from securing another apartment.

 

[Badbrains]

One last item, not to scare you, but writing a check that bounces or is deemed NSF, can be considered theft by check.

They could possibly turn the check over to the District Attorney's office in your area and file criminal charges, it can be charged as a misdemeanor.

Worst case and I doubt they would take the time to chase it, but just had to throw it out there.

 

[Searchertwin]

California

I put a security deposit down for an apartment $600.00. However, I did not put down a holding deposit to hold the apartment. The apartment was still being advertised on craigslist after the signed date. I signed the agreement on 1/9 (saturday). The company couldn't do anything until Monday (1/11). I was notified I was approved on Tuesday (1/12). I notified the company I did not want to rent the apartment on Wed (1/13). When I came to notify them, they did not return my security deposit check and said I'm liable until they can rent the apartment. After researching the terms of "security deposit" and "holding deposit", it is two different things according to California's Dept. of Consumer Affairs. I then, cancelled the personal check, and notified the company in writing that I cancelled the check. The company is now threatening to send me to collections if I don't pay the security deposit, plus a returned check fee (even after I notified them it was cancelled).

What can I do? Please help.

Agreement Form

The balance of the Security Deposit, in the amount of $600, to complete the full deposit payment of $600 is due on or before 1/16/2010. If the prospective resident gives management notice within seventy two hours of the date of this agreement that he/she does not intend to occupy the apartment, a full return will be made of all deposit monies paid. If the Application is not accepted by the management, the deposit will be fully refunded, but the credit check fee will not be refunded.

Applicant understands that once this Agreement is signed by the Applicant, and the holding deposit is received by Owner / Agent, the apartment will be taken off the rental market and reserved for Applicant, and other potential applicants will be turned away. If applicant fails to complete rental of said apartment on the agreed upon date, a charge of $36.50 per day will be charged against the “holding money deposit” as liquidated damages to include any days the apartment was held vacant for Applicant beginning with the day this Agreement was executed up until the day a new renter begins paying rent on the subject unit.

Prospective resident understands the security deposit tis to be held for faithful performance of the terms of rental agreement and not be used for any rent or other charges due. Management may retain all or any portion of this security deposit as partial or complete reimbursement for the following losses:
1. Cost to clean/restore apartment
2. Shampooing, drapery
3. Paint based upon a pro-rated scheduled if less than two years.
4. Damages to apartment other than normal wear and tear.
5. Cost to replace keys, furniture, gate passes, etc.
6. Unpaid late charges, delinquent rent, utilitiy bills, towing charges, or other charges owing at the termination of tenancy.

In your own words, you acknowledge it was a security deposit, not a holding deposit. "I put a security deposit down for an apartment $600.00."
According to what you said, the 72 hours had passed from time of signing, 1/9 to 1/13.... The company has the right to demand payment. Just because they did not take it off Graiglist as fast as you wanted, does not mean nothing. A newspaper ad, once paid for, will run it course, even if house is done rented. The ad might run another week. A newspaper will not refund any money. Now, if you would have within the time frame, before the 72 hours elapsed, THAN, you might have been released from the contract. Everyone has a phone that leaves a message, or you could have sent a email. Something to show proof that you did within 72 hours.

 

[atomizer]

Property management books actually discourage the practice of holding fees/Sd for this very reason. Tenants do not understand the concept of a holding fee. But even when they do, they search for a loophole or think of some bullcrap excuse that the LL is suppose to be understanding about and will eagerly refund the SD.

Security deposits are not worth the trouble they bring. It is best to take the SD and the rent at the time the tenant signs the lease. If they change their mind because uncle Joe's cousin has a niece that needs a roommate, than the tenant is out of luck, not the LL.