Applications and deposits

What should I look for on an application?

Austin Tenants Council lists the following things to look for on an application:

  • How long the landlord has to refund the deposit if the application is rejected;
  • The unit number of the apartment you are seeking to lease;
  • The amount of the security deposit;
  • The move-in date and the length of the lease term;
  • The names of all people who will live in the unit including all children;
  • Whether pets are allowed and the amount of the pet deposit;
  • Whether the landlord pays for any utilities;
  • Written documentation of any oral promises by the manager or leasing agency such as “the agent will paint the unit prior to move-in” or “the carpet will be cleaned”; and
  • Any other information that will be used to fill out the lease.

You should also look for the monthly rent amount, the due date for payment, and the amount of the late fee.

Do your homework first.

It’s best not to apply unless you are pretty sure that you want to rent the apartment.  For more advice about what to look for when you fill out your application, check out this page from Austin Tenants Council. Once you sign paperwork and give the landlord money, it can be difficult to negotiate or back out.  There are laws that may help you get your money back if you back out, but since the amount is pretty small, legal action is not common.  The best plan is to check the landlord and the property out first. See Before you sign the lease agreement.

Landlords must tell you their tenant selection criteria. 

Tenant selection criteria are like a checklist for a landlord. If you, the tenant, fit all their criteria, they should rent to you. Landlords are required to provide applicants with written notice of their selection criteria. For example, the landlord may deny an application because of the applicant’s criminal background, rental history, income, or credit score. With the notice that they are required to give, you can get a good idea before applying if you will be eligible for the rental. You may be asked to sign a document that says that you received the notice of the landlord’s selection criteria. You can find out more about this at TexasLawHelp.org.

Remember, the landlord can keep your application fee even if they reject your application. There is one exception — if the landlord does not tell you the selection criteria in writing, and the landlord rejects you, the landlord must return the application fee and deposit. Section 92.3515, Property Code.

Check your credit record.

When you submit a rental application, the landlord will probably check your credit record. So, before you start looking for a place, it is good to know where you stand. There are three big credit reporting agencies (Experian, Equifax, Transunion). The official website where you can get a free copy of your credit report once a year is www.annualcreditreport.com. For advice on correcting any mistakes in your credit record and understanding your results, check out this page on Credit Rights in Texas from Austin Tenants Council. It is always best to try and clear up any problems or mistakes on your record before you fill out a rental application. Many landlords check credit ratings with one or more of these companies in addition to using tenant screening services, like Tenant Tracker, that look at criminal and eviction records.

What is an application deposit?

Check out the Texas Tenants’ Union video below that explains deposits.

Landlords can ask for or require a deposit to hold a property for you. These are usually called application deposits or “hold deposits.” When you give a landlord an application deposit, this lets the landlord know that you plan to sign the lease if the landlord approves your application. If the landlord approves your application, the application deposit is usually converted to a security deposit. If the landlord approves your application and you change your mind and decide not to rent their property, most landlords will keep your application deposit. If a landlord rejects your application, then the landlord should return your application deposit.

What is an application fee?

An application fee is a nonrefundable fee that you may be required to pay when you submit your application. It usually covers the cost of processing your application and doing a background check. See “Do I have to pay a rental application fee?” from texaslawhelp.org for more information.

Application deposits are different from security deposits and application fees.

Application deposits are not considered security deposits because there is no lease agreement between tenant and landlord at this point. The applicant is not a tenant so the security deposit rules do not apply. Once you and the landlord sign the lease, the application deposit may be converted into all or part of the security deposit or applied as rent.  You can find more information about how application deposits are regulated in Subchapter I, Chapter 92 of the Texas Property Code.

An application deposit is in addition to the application fee landlords will charge you. Application fees are supposed to pay for processing the application, as well as the cost of doing a background check. Application fees are usually not refundable, except when the landlord does not tell you their tenant selection criteria (see above).

What is a security deposit?

A security deposit is money a tenant pays to a landlord when they move in.  It provides some protection to a landlord in case of damage to the rented property or for some other failure of a tenant. If you follow your lease and don’t damage the property, you should get your security deposit back when you move out.

A security deposit is not the same as an application deposit or a fee. Advanced rent (like first month or last month’s rent) is not a security deposit either. See the Security deposit page for more information on this.

How long does a landlord have to respond to an applicant?

The law says an applicant is considered rejected if the landlord does not give notice of acceptance within seven days from the date the person submits a complete rental application. If the landlord does not give the applicant a rental application, then the applicant is considered rejected seven days after the landlord accepts the application deposit. See Tex. Prop. Code 92.352

The law does not impose a specific deadline on a landlord for the return of the deposit after an applicant has been rejected. But many form agreements say that a landlord has 30 days to return an application deposit after rejection.

What happens to the application deposit if you change your mind and don’t want to rent there anymore?

This will be determined by the terms of the rental application you signed.  The rental application probably said that if you are approved and do not move into the unit, you forfeit the rental application (the landlord keeps the deposit). The Texas Apartment Association Rental Application,  specifically says that if an applicant fails to sign the lease within three days after the landlord approves the applicant, the landlord can keep the entire application deposit as liquidated damages. Even if there is no written agreement, a landlord often considers an application deposit theirs to keep if you, the applicant, later decide not to lease from the landlord.  For these reasons, you should never pay an application deposit if you are not certain that you will move into the unit if approved.  

TIP: If you think you may change your mind, wait to see if the landlord rejects you or doesn’t get back to you. Remember, if the landlord rejects you first (or does not get back to you within 7 days), then the landlord has to return the entire application deposit.

Negotiate the application deposit beforehand.

If you don’t know whether you will move into the unit if accepted, you can try to negotiate paying only an application fee. You can also try to negotiate with the landlord and ask that the landlord to include a statement in the rental application that they may keep only a percentage of the deposit depending on how long they wait on hearing back from you. (For example, if you change your mind in 24 hours they only get 25% of the deposit; after 48 hours they get 50%.)

Negotiate to get your application deposit back.

Most landlords never give back the application fee (unless required to by law mentioned above), but sometimes they will give back part of an application deposit. You should explain why you did not like the place and see if they will be decent and give all or part of your deposit back.

The landlord kept my money unfairly.

If the landlord keeps your application deposit or fee in bad faith, the Texas Property Code says the landlord is liable to you for $100, three times the amount wrongfully kept, and your attorney fees and court costs. Section 92.354, Property Code.

If a landlord rejects you, they must give your application deposit back promptly in accordance with the terms of the rental application. If you reject the unit, you may still be entitled to get some or all of your deposit back, depending on the terms of the rental application.