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Security Deposits

Holding a Unit

Occasionally, while searching for a suitable rental property, the tenant will find a desirable property which is available before the tenant is prepared to sign a lease on it. The tenant may want the landlord to “hold” the property – stop showing the property to other potential tenants and ensure that the property is ready for the tenant to take possession at lease signing. Generally, the landlord will require the tenant to give a deposit immediately, with the understanding that this money will become part of the security deposit when the tenant signs the lease.

The landlord takes this early deposit as protection against the tenant deciding not to rent the property. If the tenant decides not to rent the property, since the landlord will have to incur the additional expense of advertising the property again, and the landlord potentially loses some rent – the landlord may have been able to find a different renter if the landlord was not holding the property for the prospective tenant. Generally, if the tenant simply decides not to rent the property after asking the landlord to hold it, the landlord will have the right to keep the deposit to make up for these damages. However, the tenant may be able to force the landlord to refund the deposit if the tenant can show that the property has a substantial hidden defect that the tenant could not have reasonably discovered when the tenant gave the deposit or if the landlord gave a substantial misstatement about the property to the tenant.

This type of arrangement is solely governed by the agreement between the landlord and the prospective tenant at the time the deposit is given. Nebraska’s Landlord-Tenant Law does not specifically address this type of transaction. This makes a full and complete understanding of the agreement vital for both the landlord and the tenant. Both the landlord and tenant should ensure that they sign a written agreement regarding this deposit. The tenant should completely read and fully understand the written agreement before giving the deposit. The tenant should pay special attention to the part of the agreement that says what circumstances must occur for the tenant to receive a refund of the deposit and that the money exchanged will become the security deposit when the lease is signed.

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