How to Avoid Non Refundable Deposit and Fees
Different types of fees may be requested from a potential tenant, of which the most common one is the security deposit. However, depending on the state in which the property is located, there may be a possibility to charge other fees such as cleaning fees, pet deposit fees or the first and/ or last month rent. In essence, most rental agreements do come with some form of deposit which deposit can be refunded at the end of the lease or used to accommodate whatever scenario is in the agreement. For example, security deposit may be used to deal with any damages to the property once the lease has come to an end as long as the damages are not normal wear and tear and there is adequate proof that the ex-tenant caused them. It can also be used to clear any unpaid rent or pay for cleaning services in case the premises were left filthy.
Another fee, Non-refundable fee or move-in fee has gained popularity over the years in a number of states although its legality may be questionable in some states. A non-refundable fee as the name suggests is not meant to be refunded at the end of the lease or tenant-stay. This is unlike a security deposit which is liable for a refund in the event that no damages require repairing, no rent arrears require clearing and no cleaning is needed. The non-refundable fees may be charged to help cover the cost of a number of possible changes that may result between residents. Such instances may include changing directories, updating mailboxes or reprogramming buzzers. In essence, it is meant to be used by the landlord to help prepare the residence for the tenant to move into.
With the entrance of non-refundable fees comes a drastic reduction in security deposit fees which may be a welcome change for some tenants. However, there are those who see this fees as some kind of scam as the landlord is perceived to keep a handsome fee to themselves regardless of how the tenancy turns out. On the other hand though, the landlord may run the risk of being shortchanged in the event that the non-refundable fee asked for is not enough to cover any damages caused by the tenant.
In most states, a landlord can legally charge a tenant for non-refundable fees which normally cover cleaning. The beauty of a non-refundable fee is that you don’t have to ensure that the deposit is in an escrow interest generating account since it will not be refunded to the tenant unlike a security deposit. This means that the landlord is not required to part with the interest that accumulated from the fees over time unlike the case with a security deposit. The problem with such a deposit however is that it may not be adequate enough to cover whatever costs such as cleaning or damage repair that may over down the road.
Before charging a non-refundable fee, be sure to check that it is actually applicable in the state you are in to avoid legal consequences. You should also check to ensure that you have a clear understanding of what the law requires you to use the non-refundable fees on. Most states for example allow a reasonable non-refundable fee to be charged as long as it goes towards cleaning. In other instances it may be allowed for high-risk tenants such as those with pets.
Much as non-refundable fees may have a good ring to them since they are not refundable, they do come with their own set of problems. In order to avoid such problems, it may be better to go with other fees such as security deposits and first and/ or last month rent.
Understanding the laws that govern your state and the fees that you may legally collect as a landlord will save you from a number of legal disputes. In addition, documenting your property can help you when you find yourself in a legal battle. Be sure to take plenty of evidence of the state the property was in before the tenant occupied and the state the tenant left the property in. Ideally, you should look towards using a camera to take quality photos of the property. Remember to ensure that the photos taken are date-time stamped to further ensure that yours is an air-tight case!