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Landlord wants a non-refundable move in fee instead of security deposit?

By Edited Nov 13, 2013 0 0

What is a non-refundable move in fee anyways?

In some cities landlords are now giving up on security deposits, and instead requiring payment by tenants of a non-refundable move-in fee.  Sometimes this fee is called a processing fee, transaction fee, or the like.  But the hallmark is that the fee is non-refundable.  Thus, unlike a security deposit, the tenant never stands to get this money back, even if they return the apartment in better condition than they found it at move in.

Chicago student rentals

Another problem with giving a landlord a non-refundable fee instead of a security deposit is that the landlord will not be governed by laws that many states and cities have that protect security deposits.  At least for residential leases, a security deposit is often protected by laws requiring it to be held in a special bank account, to have interest paid on it, and to be accounted for in case of deductions.  In contrast we are not aware of any laws that apply to non-refundable fees.  
Why have many landlords abandoned security deposits altogether?  Probably because of the laws alluded to above. 

In the 1970’s a Model Uniform Residential Landlord Tenant Act (URLTA) was prepared and circulated by the National Conference of Commissioners on Uniform State Laws with amendments in 1974.   A lot of states adopted their own versions of it.  Around the same time, some of those states, and other states, enacted security deposit laws also.  By the 1980’s, local municipalities had some of the most tenant-oriented protections in the country, and maybe the whole world.  College towns like Madison, Wisconsin, Washington, D.C., and Evanston, Illinois all enacted laws substantially more burdensome for landlords than the laws of the states they occupied (or abutted).  Since that time amendments to state laws and such local ordinances leave landlords in a lot of places subject to laws unthinkable 30 years ago.  The business of leasing apartments is no doubt a different world today, with lawyer fees, penalty damages, and class actions awaiting those who fail to acquaint themselves with rules for their town. 

So landlords reasonably stop allowing the security deposit Trojan horse into their bank account, and forfeit the privilege of holding your money in order to avoid being sued by you.  It is probably a wise business practice.

This leaves you with the choice:  give a landlord a fee you will never see again, or find a different landlord who still takes a security deposit, and risk losing it, but also have a chance of getting it back.  Seems the obvious choice is still to give a security deposit.



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