How common are Earnest Money Deposti in Rental applications? Our apartment is in DC and we want to rent it.

Asked by Toppoli150, Washington, DC Wed Apr 8, 2009

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Lise howe, Agent, Rockville, MD
Wed Apr 8, 2009
Earnest money deposit in this case would be the same as the security deposit except that it is at risk, as you pointed out, if you don't go through with the rental. I don't think it has been terribly common in the past, but given the state of the economy, everyone is a bit on edge financially, and an owner is not going to want to take his/her apartment off the market, and then have you change your mind at random. This may be the new way to guarantee performance.
Web Reference:  http://www.lisehowe.com
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Jan Brito, Agent, Bethesda, MD
Wed Apr 8, 2009
The only nonrefundable fee would be the application fee. Perhaps the community you're referring to is calling the application fee an earnest money deposit. Until a lease is actually signed, you don't have an agreement.
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Toppoli150, , Washington, DC
Wed Apr 8, 2009
Thanks for your reply. I actually want to know about "Earnest Money Deposit" in "Rental Application" in Washington DC. I saw a couple of apartment management companies had that in their application. It is non-refundable if the applicant changed thier mind after thier application was approved.

Is it legal?I s it common?
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Jan Brito, Agent, Bethesda, MD
Wed Apr 8, 2009
When you take the application, you may want to charge an application fee which covers your cost for running the credit report and your time in verifying past rental references and employment verification. At the same time you take the application and application fee, you should collect a check equal to one month's rent that is referred to at this point as an earnest money deposit. You will hold this check while processing the application. Once accepted, you will deposit this check and apply it toward the first month's rent. When you sign the lease with your new tenant, collect a security deposit, typically equal to one month's rent, along with any applicable pet deposit.
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CSB, , 20007
Wed Apr 8, 2009
Good afternoon,

Landlords often ask for security deposits, is this what you mean by earnest money? If so, it is important to keep in mind that by DC law, security deposits can not exceed the amount of one moth's rent (i.e if the monthly rent is 2500, the security deposit can not be more than 2500)

Hope this helps,

Best,

Christopher
Web Reference:  http://www.dcchrisblog.com
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