Non-refundable deposits (apartments, lease agreement, tenant, rental)

[540_804]

I have seen many listings that note that a non-refundable security deposit is required.


Some ads might say that "a $300 non-refundable security deposit is required) or another might say "$700 deposit required, $300 of which is non-refundable."

What is the purpose of this?

If its non-refundable why require it at all; why not just include it in the rent?

Is this for marketing purposes (a $300 non-refundable deposit would theoretically make the rent $25/month cheaper than including the fee in the rent).

Is this for accounting purposes? Maybe rental income is accounted for differently than a security deposit.

I know what the deposit is for, so I'm not asking that. Just curious as to why someone would charge a separate non-refundable amount instead of just figuring that into the rent.

Hopefully you guys can shed some light on this practice.
Thanks in advance.

[DrEarth]

I always thought the reason was to keep more of your money if there is no pet involved.

[KonaKat]

Usually the refundable deposit is against damage or loss. Sometimes a non-refundable cleaning fee or pet fee is also charged where allowed by law. Before signing a lease, I would make sure to read every word of the small print, all addendum and any "tenant handbook" that might be issued by the landlord because they are actually a part of the lease agreement. For instance, we check a box that says a copy of the "suggested vacate instructions" is included in the lease. Then, when move out rolls around, they say "what do you mean I have to have the carpets professionally cleaned, and wash the windows & screens?"

[virgode]

Its all about whats allowable by state law, would be illegal according to LL/T code in my state, other than non-refundable pet deposits.

I'd ask to see the lease in advance when looking at these properties.
Is there a non refundable pet deposit on top of the partial non refundable deposit if you're a pet owner or are they assuming most residents will have a pet? Are these units furnished?

IMO, its a legal way to charge a tenant for normal wear and tear.

[jdm2008]

Originally Posted by 540_804

I have seen many listings that note that a non-refundable security deposit is required.


Some ads might say that "a $300 non-refundable security deposit is required) or another might say "$700 deposit required, $300 of which is non-refundable."

What is the purpose of this?

If its non-refundable why require it at all; why not just include it in the rent?

Is this for marketing purposes (a $300 non-refundable deposit would theoretically make the rent $25/month cheaper than including the fee in the rent).

Is this for accounting purposes? Maybe rental income is accounted for differently than a security deposit.

I know what the deposit is for, so I'm not asking that. Just curious as to why someone would charge a separate non-refundable amount instead of just figuring that into the rent.

Hopefully you guys can shed some light on this practice.
Thanks in advance.

Often(in all states that I know off) a non refundable security deposit is illegal.

[Ultrarunner]

Must not be in California... there is no such thing as a non refundable Security Deposit in California on Residential Rentals... and don't let anyone tell you different.

Also, application fees are also regulated per adult applicant.

[Opyelie]

Apart from a pet deposit or some such there's no way on god's green earth I'd be giving ANY LL a non refundable "security deposit". Talk about greedy.

[kodaka]

A deposit by definition has to be refundable. But a lot of LLs charge non-refundable fees instead of deposits. There's a lot of reasons for doing it.

For one thing, its easy money. Even if you leave the apartment in perfect condition, they get to keep your deposit. And if you damage the apartment, they keep your fee and they sue you. It's a win-win for them.

For another, its simpler bookkeeping. They don't have to maintain separate interest-bearing accounts. They don't have to itemize deductions and send it certified mail by a certain date after you move out. They simply pocket your fee and the transaction is done.

The latter benefit is particularly appealing for apartments that offer short-term and month-to-month leases. The less time you live there, the less time management wants to spend administering your tenancy. The more time-consuming deposit method eats into their profits.

And some LLs will charge both--a deposit, which covers the condition of your unit alone. And non-refundable fees, which may cover pet move-out cleaning, or community amenity costs or parking, et cetera.

[uclabruins]

The apartment I am moving into had a 300 dollar administrative fee which is nonrefundable and then a 200 security deposit.

[540_804]

Originally Posted by virgode

Its all about whats allowable by state law, would be illegal according to LL/T code in my state, other than non-refundable pet deposits.

I'd ask to see the lease in advance when looking at these properties.
Is there a non refundable pet deposit on top of the partial non refundable deposit if you're a pet owner or are they assuming most residents will have a pet? Are these units furnished?

IMO, its a legal way to charge a tenant for normal wear and tear.

Most (if not all) of the units I looked at were unfurnished and most of the places prohibited pets all together. Perhaps I'll try to find an example of one of these listings and post it here for you guys to look at.