A holding deposit is money a landlord can ask a tenant to pay to take a unit off the market until the tenant moves in at a later time. This typically happens when a tenant sees a unit that they like but they are not able to move in right away. By paying a holding deposit, the tenant secures the unit and the landlord agrees that they will not rent the unit to any other prospective tenant. RCW 59.18.253 addresses holding deposits, and tenants can refer to this section of the Residential Landlord-Tenant Act (RLTA) for exact language of the law including the changes that took effect in July 2011.
The following tip is general information that tenants may find useful in addition to reviewing the exact language of the law.
In order to take a holding deposit from a prospective tenant, the landlord needs to provide:
- A receipt to the tenant upon payment of the holding deposit.
- A written statement of conditions in which the holding deposit may be retained.
When the tenant moves in, the landlord must apply the holding deposit towards the tenant’s security deposit amount or first month’s rent. If a tenant chooses not to move in, for example if they change their mind and find a different place to rent, the landlord can keep the holding deposit. It is important for tenants to understand how holding deposits work before paying one to a landlord, because it can be costly to have it withheld if the tenant chooses not to move in.
Before paying a holding deposit, tenants can consider the following questions:
- Have you passed the landlord’s screening criteria and background check?
- Is this a fee that the landlord is asking for to place you on a waiting list until a unit becomes available? The law dictates that the landlord cannot accept a fee for this purpose. A holding deposit is not the same as a screening fee.
- Is the landlord offering the unit only to you and asking for a holding deposit to secure the unit for you only?
- Have you reviewed the rental agreement terms, looked at the actual unit you will be renting, and know for sure you will be moving into this unit?
These questions can help tenants decide whether they should pay a holding deposit or if they may want to reconsider. For example: If a tenant has not yet been approved by the landlord after completing a background and credit check, there is no guarantee that the tenant will be accepted and offered the unit. If a landlord is asking for a holding deposit at this stage, it may be a red flag that they are not following the law. The unit should be offered and held for a particular tenant in order to accept a holding deposit.
The recent law changes to this section of the RLTA give additional rights to tenants who are receiving assistance through a tenant-based rental assistance program, such as Section 8 or other subsidized housing. When a tenant covered under such programs pays a holding deposit, they are now entitled to get the holding deposit back when the unit they are interested in fails the required inspection by the qualified party of such program. RCW 59.18.030 provides definitions as to who is considered to be a qualified inspector under these guidelines.
Landlords can no longer keep a holding deposit from a tenant due to their units not passing such inspection. Failing inspection is not considered to be the same thing as a tenant simply changing their mind about renting that particular unit. Prior to the law changes, landlords were unfairly keeping holding deposits from tenants even though it was not up to the tenant to decide whether or not they could move in. The decision was made by the program providing the assistance and completing the inspection. If the inspection is not completed within ten days, however, the landlord can notify the tenant that they will no longer be holding the unit past this time or past a longer period that the landlord and tenant may have agreed upon. In this case, the landlord must promptly return the deposit to the tenant by sending it first class mail, postage prepaid.
If a landlord fails to promptly return the holding deposit to a tenant who, based on the law, should be getting the deposit back, they can be held liable for up to twice the amount of the holding deposit. The landlord must promptly return the deposit to the tenant by sending it first class mail, postage prepaid.
If you have questions about holding deposits or other rights as a tenant, you can visit the Deposits section of our website or contact the Tenant Services Hotline at Solid Ground at 206.694.6767 (M, W & Th, 10:30 am-4:30 pm) to discuss your situation with a Tenant Counselor and for potential referrals to pro bono legal services.
The tenant information contained in this article or linked to the Solid Ground Tenant Services website is for informational purposes only. Solid Ground makes no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to its website. Solid Ground cannot act as your attorney. Solid Ground makes no representations, expressed or implied, that the information contained in or linked to its website can or will be used or interpreted in any particular way by any governmental agency or court. As legal advice must be tailored to the specific circumstances of each case, and laws are constantly changing, nothing provided herein should be used as a substitute for the advice of competent counsel. Solid Ground Tenant Counselors offer these tenant tips as generalized information for renters. People with specific questions should call our Tenant Services hotline at 206.694.6767 Mondays, Wednesdays & Thursdays between 10:30 am and 4:30 pm.