We collected an earnest deposit for our rental house. The couple now decided they don't want the house after we accepted them. Do we return the?

Asked by Tanya, Leesburg, VA Tue Aug 10, 2010

money? Our assumption was that we could keep money from their earnest deposit to cover our losses. We are out two weeks rent. We declined other applicants when we accepted them.

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3
Nathan Gesner, Agent, Cody, WY
Thu Sep 2, 2010
Were they placing earnest money down to purchase your rental property, or were they putting a holding deposit down so you would take it off the market and allow them to rent from you? I'm guessing you're referring to the latter scenario.

When you agree to rent to someone, they are under no obligation unless you have something in writing. It sounds as if you agreed to rent to them as long as they put some "earnest money" down, which they did. But if there's nothing in writing that contractually binds them to renting, they can back out at any time.

Any time a potential tenant wants to rent from me, I require money down and a signed holding contract. My holding contract states I will take the unit off the market and hold it for them (never more than seven days). If they change their mind, the holding deposit is used to pay for the number of days the unit is vacant until a suitable replacement tenant is moved in. If they decide to rent from me, the holding deposit converts to a security deposit once they sign the contract. The key is to get everything in writing. If you take people at their word, you'll soon learn that words are cheap.
0 votes
Andres Piedra, Agent, Alexandria, VA
Sat Aug 14, 2010
If they used a contingency of the contract (ie, Home Inspection of Financing Contingency), then you'll have a really hard time hanging onto the earnest money deposit.

Wait, were you selling the house or these folks wanted to rent it, so you got the EMD for the rental? Either way, the anwer to your question is embedded somewhere in the contract language.

Best of luck to you.

Andy Piedra
Keller Williams Real Estate
Andres.Piedra@KW.com
0 votes
Don Tepper, Agent, Burke, VA
Tue Aug 10, 2010
Check with a lawyer.

You should be able to retain their deposit--that's what it was for. You may be required to attempt to mitigate (minimize) your damages, although The Virginia Residential Landlord and Tenant Act only applies if you have 10 or more (or in some jurisdictions 4 or more) rentals. See http://www.dhcd.virginia.gov/HomelessnesstoHomeownership/PDF…

Hope that helps.
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