Hold On To Rental Property With a Holding Deposit Agreement
We’ve all been there—looking for a place to live must be one of the most nerve-wracking experiences. When an endless, tiresome search for a great rental property bears fruit, you want to hold on to your excellent find—that’s what a holding deposit agreement does for you.
A holding deposit agreement is a legal document that specifies the terms and conditions of reserving a property for a prospective tenant. The tenant pays the landlord a certain amount of money—known as a holding deposit—so the landlord takes the rental property off the market until they both sign a leasing agreement or one of them withdraws from the deal.
The holding deposit agreement ensures that the landlord doesn’t lose money on unreliable tenants and that the tenants keep their hands on their chosen rental property.
If your budget doesn’t leave any space for hiring a lawyer, you can always make your documents yourself. It might seem tricky, but with the right amount of help, you can write a brilliant holding deposit agreement without spending any money!
To make a solid holding deposit agreement, you need to know what the essential clauses are to ensure both signatories are safe. Those elements are:
- Holding deposit payment details
- Lease agreement deadline
- Holding deposit return circumstances and deadlines
The tenant will pay a certain amount of money to the landlord via the payment method they agreed on and on the date they specified in the holding deposit agreement.
The tenant should enter the property within the deadline they agreed on with the landlord in the holding deposit agreement and then sign a lease agreement. If the tenant needs to prolong or shorten the time frame, they can renegotiate this with the landlord in writing before the initial deadline.
The circumstances under which the landlord can keep the holding deposit are when the tenant:
- Provides incorrect information on the lease application
- Withdraws from the deal
- Doesn’t take all steps towards signing a lease agreement
When the tenant withdraws from the property, the landlord retains a certain amount of the holding deposit. The exact amount they will keep depends on the profit loss the tenant caused with their reservation (a months’ rent divided by the reservation duration).
The landlord must return the holding deposit when the tenant:
- Signs a lease agreement (seven days after signing, unless the tenant states they want to use it to pay rent or security deposit)
- Withdraws from the agreement
- Doesn’t make a lease agreement with the landlord before the deadline
For a better overview of what you need to include in your contract, check out the table below:
|Holding deposit payment||
|Lease agreement deadline||
|Holding deposit return circumstances and deadlines||
If you decide that drafting agreements on your own requires too much of your time and effort, but lawyers are still too pricey for you—skip the messy process and let DoNotPay draft your legal documents in a few minutes:
- Access DoNotPay from your browser
- Type in the name of the document you need in the search bar
- Answer the chatbot’s questions with important information you want to include in your document
After you download and sign your paper, you can get it notarized quickly using our Notarize Any Document feature—and you’re good to go!
DoNotPay is the most accessible, affordable way to draft countless documents from various categories. Here are some of the currently available documents you can choose from:
- Promissory Note
- General Affidavit
- Estoppel Certificate
- Quitclaim Deed
- Intent To Purchase Real Estate
- Residential Lease Agreement
Yes, a signed holding deposit agreement is legally binding, and signees will face legal consequences if they breach the agreement. Landlords can also experience legal repercussions if they take more than one holding deposit per property—this discredits the whole point of a holding deposit. In addition, they should never state that the holding deposit is non-refundable because that is a breach of trading standards regulations.
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