When renting a home it is common to deposit into an escrow account an earnest money deposit with a value of the monthly rent of the home you are interesting in renting.
These funds are held in escrow until either a lease is secured and you move-in to the home or the offer is declined, at which time the funds are returned to you.
Here are a few Frequently asked questions on Earnest Money Deposit:
What is an Earnest Money Deposit? This is a deposit towards the rent of the home. When you make an Earnest Money Deposit, you are telling the landlord or property manager that you already have funds secured towards the rental of the property. If the lease is secured and you move in to the home, the earnest money deposit is dispersed in accordance with the contracts in place governing such deposit. If the offer to rent is not accepted, then the funds are returned to you within 3 business days.
Why do I have to make an Earnest Money Deposit? Too many times in the past, prospective tenants have made an offer to rent, secured a lease, and then back out. For a landlord this scenario equates to a loss of revenue and time. For this reason if there are no funds in an escrow account securing the offer to rent, very few landlords will even consider the offer. The landlord can make a claim against the earnest money deposit if they have accepted the offer to rent, secured a lease and then the tenant back out of the lease.
