The lease signing and inspection walk-through with the new tenant is scheduled for this weekend. She notified me today (Wednesday) that she is having problems coming up with enough money for the security deposit and the first month’s rent. She wants me to let her pay the deposit in installments after she moves in. Is this something I should worry about?
It is not unusual that a selected applicant informs a landlord at the time when security deposit and rent are to be paid that he/she is short some of the funds due. What you can do may depend upon whether the issue is regulated by your state’s landlord-tenant statutes, local ordinances, and the terms and conditions of your lease agreement.
Most states have statutes governing the collection, handling, and application of move-in funds. Many municipalities have local ordinances that regulate the move-in process including fees and deposits. As example, the city of Seattle Rental Agreement Regulation Ordinance has requirements regarding security deposits, pet deposits, move-in fees, and last month’s rent. Seattle landlords governed by the ordinance must allow an installment plan to pay a security deposit, a pet deposit, move-in fees, and last month’s rent. The payment plan must be structured as specified in the ordinance unless otherwise agreed to by the landlord and tenant. A payment plan of 6 consecutive and equal payments is required for rental agreements of 6 months or longer.
You will need to comply with applicable regulations. If statutes or ordinances do not address the issue you will look to your lease terms and conditions. If your lease agreement has words that make its commencement contingent upon receipt of all funds due, you can tell her that you will have to find another qualified applicant unless she can come up with the funds before the agreed deadline. Many times the potential tenant will be able to find the required funds after all.
If your lease does not address the issue and you prefer for business reasons to allow possession of the unit upon payment of less than the total funds due, there are certain ways to minimize the risks.
First, be sure that you require execution of an addendum to the lease that clearly states the agreed schedule of payment of the deficiency and that failure to perform is a material default of the lease resulting in lease termination.
Second, be sure that the addendum clearly states that the unpaid portion is rent rather than part of the security deposit. The reason why this is important is that it is usually easier and faster to obtain an eviction for non-payment of rent than for most other defaults.
As a general rule, possession of a rental unit should never be given until all funds have been received or an acceptable modification of the lease terms is executed. If the selected applicants have been given legal possession (e.g., by giving them a key or allowing them to store personal property on the rental property) a landlord might have to proceed with eviction if the parties cannot come to agreement regarding resolution of the problem.