Holding deposit 2025

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Were used to seeing this practice in the retail industry, but did you know it is also commonplace in the rental world? Like an item at a clothing store, prospective tenants can reserve an apartment with a holding deposit before signing a lease agreement.
If you decide to cancel something you paid a deposit for, the seller is usually not required to give your money back. In some cases, the seller might allow cancellations if you change your mind, depending on the terms and conditions (see above).
You should usually get all the money back if the landlord decides not to rent to you. The landlord or agent might keep your holding deposit if you: decide not to rent the property. give wrong information or tell them something that is false.
A deposit hold means that although a check amount was credited to your account, its not available for your use.
A deposit is non-refundable if its reasonable at the time the contract was signed. In California law this concept is called liquidated damages. Parties to a written contract can agree in writing what is going to be the penalty for a party to break the agreement.
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The landlord or agent must tell you why they are keeping the holding deposit. If they do not write to you with a reason within 7 days you have the right to a full refund, whatever the reason.
If you change your mind before you move in, you might need to negotiate to get out of the contract. If the landlord still has your holding deposit, you could say they can keep it. Make sure your landlord confirms any agreement to let you out of the contract in writing.

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