Why Landlords Are Opting For Non-Refundable Move-In Fees Over Security Deposits

A relatively new pattern seen amongst landlords is opting for non-refundable move-in fees rather than security deposits.

Despite misconceptions, these are not interchangeable.

They both have their own advantages, but if you decide to begin charging non-refundable move-in fees, you'll see several exciting benefits.


Move-In Fees Not Affected by Deposit Law
While collecting a deposit for potential damage to a rental property doesn't seem hard, state laws often make it alarmingly complex.

In some states, landlords are required to have a bank account or trust set aside specifically for security deposit payments.


Additionally, there are some areas where tenants must be paid money if interest is earned on their deposit.

Additionally, every state has specific a specific timeline of when these deposits must be refunded.

You may be required to send a landlord security deposit letter.

These rules can become quite complex, especially if you own properties in more than one state.

Fortunately, non-refundable move-in fees aren't governed by these laws.

Move-In Fees Saves Tenants Money on Security Deposits
Some tenants may see a non-refundable fee as a scam or ripoff; assure them that this payment is in both of your best interests.

By doing so, you can negate their security deposit entirely, and since you won't have to worry about refunding, you can charge substantially less for the non-refundable fee than a security deposit.

However, in most areas, security deposits and non-refundable fees do not preclude each other.

If it seems beneficial, charge a lower security deposit in lieu of the move-in fee.

This way, the tenant will still receive money back as long as there are no damages while you'll still have a move-in fee to handle other issues.


Move-In Fees Offer Less Hassle When Tenant Moves Out
One of the biggest hassles related to security deposits is figuring if, and how much, to deduct once a tenant moves out.

If there was damage to the unit, the deposit can be used to repair the issue.

Note that you'll have to refund what's not used for repairs.


Security deposits can become especially hairy when you evict a tenant.

Most daunting is when a tenant argues over a security deposit they don't necessarily deserve back. It's important for landlords to understand when to withhold a security deposit.

If, however, you have a non-refundable move-in fee, this trouble can be entirely avoided.

Move-In Fees Guarantees Coverage of Incidentals
One of the biggest advantages of move-in fees is that they guarantee coverage of certain incidentals.

If there's minimal damage to a unit, the fee can cover all expenses.

If you need to change out locks and pay house cleaners before a new tenant moves in, the fees can go towards those expenses as well.


However, charging a fee isn't an invitation for residents to leave properties severely damaged. If they cause damage that exceeds the move-in fee, you can always take them to court.


A good landlord knows every tool at their disposal and the non-refundable move-in fee is one of the best new tools available.

Consider the benefits of both options, and whether you choose both or solely a move-in fee.

You'll rest easy knowing you're better protected from legal action and headaches.

Posted on Jul 22, 2015

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