Lesson preview: This lesson covers the payments you must make when you sign your lease, to include your first month’s rent and sometimes last month’s rent too (your lease will make clear what you must cover up front) and variety of possible deposits. It also explains what you’re responsible for upon move out and how that relates to how much of your security or damage deposit you’ll get back. Lastly, this lesson reviews how to make your rent payments and what you should do if you’re going to be late with your rent.
Expect to make the following payments when you sign your lease agreement.
Before you move in:
We’ve already covered the Application Fees and Screening fees which typically cost between $25 to $75.
When you sign your Lease Agreement:
- Your first and sometimes also your last month’s rent payment: At this stage, you already know the cost of renting the property. You did your research on typical rents in your area and gave the property you’re about to rent a general inspection, so you know what you’re signing up for. If you have concerns about the amount of rent, you should cover that before you sign the lease.
- Any utility deposits you’ll be responsible for: You may be required, according to the details of your lease, to pay additional charges each month for services such as electricity, gas, water, sewer and garbage. It’s possible you will be asked to make a deposit towards whatever utilities will be your responsibility.
- A Damage or Security Deposit: The typical damage or security deposit is normally the same as one month’s rent and is paid to the landlord before you move in.
- Your landlord will hold this deposit money in an account and will use the funds to make repairs caused to your rental property. If the costs of repairs are less than the amount of the damage deposit, the remainder should be refunded to you after an exit inspection, within a specific time.
- Pet Deposit or Pet Fee: This deposit or fee covers the possible (and sometimes inevitable) damage that pets do to a property. Pet deposits are generally used to make repairs with the unused balance paid back to you. A pet fee is generally not refundable. The amount of the pet deposit or fee varies depending on different factors, such as animal type, size, breed. In some instances landlords may not accept certain types of animals. Note that a Service Animal is NOT a considered to be a pet under Federal disability laws.
- Key Deposit: Landlords may require a key deposit, typically running about $10. This is to ensure that all keys are returned. In some instances, there may be a charge for lost keys because the landlord must change the locks in order to protect the property and the new tenants.
- Additional Rent: In some instances, if a Landlord feels that a tenant presents a greater than average risk of not paying rent on time, they may ask for an additional rent payment at the time of move in. This risk may come from a history of late payments or a poor credit score.
- Co-signor: Sometimes a landlord may be reluctant to rent to a first time renter or to someone with a poor financial or rental history. You could ask someone to co-sign with you, which effectively means that they are also responsible for the lease. It may be a last resort until you are able to get your personal rental history back in good order.
When Rents Can Change:
- Lease agreements may cover a set period and indicate the rent to be paid as well as when this amount is due. During the term of the lease, the rent cannot be changed unless by agreement of both the tenant and the landlord.
- For rental agreements that are month-to-month, the landlord can change the monthly rent by notifying the tenant in advance of the next month.
How to Make Your Rent Payments:
- Generally, do NOT pay your rent in cash unless you receive a written receipt at the same time. Paying in cash means there will be no record of the transaction, unless you get that important receipt. Paying with cash also opens the door for possible conflict, because there may be no record, so it has the chance of being your word against the landlords. Your rental agreement should provide instructions on how you should make your rent payment. With new ways to bank, such as mobile phone apps (Paypal, Vemo), you could ask if you could use a more convenient way to make pay the rent.
- Some possible options for making your rent payment include these:
- Mail a personal check or cashier’s check (the bank will have record of a check)
- The landlord or property manager may have a rent drop box for tenants to leave a check or money order
- Hand-deliver a check to the landlord or property manager
- The landlord may pick up the check
- The tenant may set up direct deposit, bill pay, or have the money transferred directly into the landlord’s account. Talk to your bank to find the best option. (Ask you landlord for a deposit slip).
- An electronic payment option means the payment transfers directly from your bank account to your landlord’s bank account. (Ask you landlord for a deposit slip).
- Use one of the more trusted online electronic payment methods, such as PayPal or Google Wallet. Western Union also has an app for transfer of funds
What should you do if you’re going to be late with your rent
- Don’t avoid your landlord! Contact them and let them know if you can’t pay your rent on time. This will keep your relationship on good stead, and it’s more likely your landlord will be willing to work with you to put together a payment plan. Paying late will give you a bad history and will affect you when you want a reference for the next property. Try to avoid paying late.
- Late fees: The rental agreement will normally indicate the penalty for making a late rent payment. Normally, the penalty is a set amount, but it can also include an additional percentage for each day the rent is late. The late fee begins only after the agreed upon date for paying the rent has been missed. Paying your rent late will negatively impact the small-scale landlord the most because they may use the rent money to make their own payments, such as the mortgage. Be mindful of the impact of your late rent payment and maintain a positive relationship between you and your landlord.
- If you need financial assistance, refer to family, friends and social agencies in your city. A good place to start is to call your local city office’s help line. Also refer to the RESOURCES course and the emergency contacts list, included in this course
Return of the Deposit or Repair Costs for Damages Not Covered by Deposit
We’ll cover these subjects in more detail later in the course, but for now, here are some basics you might be curious about:
- Property repairs: The terms of the rental agreement require you to return the property to its original condition (as you found the property when you moved in). As the tenant, therefore, you will be responsible for properly cleaning and repairing the minor damages to the property. In other words, after you pack up your belongings and move out, you must also take time to clean the property and repair any damages, if you want your deposit back. You cannot just move out, leaving the property messy and dirty, and expect any deposit back. Check your lease to see which damages you can repair.
- Fair Wear and Tear: When you move out, the landlord inspects the property for damage, compares the condition of the property to the property inspection report done at move in, and indicates the necessary repairs to bring the property to its former condition. The landlord must discount for “normal wear and tear,” which means that all properties deteriorate over time even in normal living conditions, and you won’t be held financially responsible for these.
- The damage deposit is often used to clean and repair the property after you move out. If the deposit is not enough to cover the necessary cleaning and repair costs, the landlord may inform you of the amount you must pay above the amount of your damage deposit.
Forms and links:
- Use the online site “Rentometer.com” to compare rent prices – https://www.rentometer.com/
- See the payment form to help you track your payments.