Why you may lose your initial deposit, commitment fee

Wednesday May 15 2019

As a landlord, collect payments after the lease

As a landlord, collect payments after the lease has been signed. This ensures that your tenant understands and agrees to the rental terms. FILE PHOTO 

By Shabibah Nakirigya

Commitment fee is an amount a prospective tenant pays to book a house and guarantee that they will occupy it. While Initial deposit is the first months of rent one is required to pay as a lump sum. However, sometimes people change their minds and want the money back, or they actually occupy the house, pay all required dues and ask for a commitment fee refund.
Ali Hamis Ali, a property agent, says for several reasons, it is rare to see landlords refunding the full amount of commitment fee and Initial deposit.

Ali says if there is any change of management within that period of time, it becomes hard for the tenant to get his or her commitment fee fully paid because the new manager will not pay money he or she did not spend.
“Normally, new management comes with new rules, including rent increment. In this case, the new management will not favour you since they also have their owns rules to follow,” Ali says.

Ali say if the landlord hires a property agent to look for a tenant, then the agent will paid the commission that you deposited. “Property agents also target this commission and the landlord will claim that a portion of your commission was given to the agent and is not in position to use his money to top-up,” says Ali.
He adds that property agents do not mind if he or she has several clients at the same site. Their job is to get as many clients as possible so that they earn more commission so its upon you to be decisive so that you do not make losses.

Choosing incomplete unit
Sheilah Namwanje, a property manager, says a tenant will never get paid his full commission amount if she or he occupies an unfinished unit. This is because the landlord is going to use your money to finish the unit.
“ If you change your mind, then the landlord has a right to refund half of the money or to say that he used all the money you deposited and if you insist, the legal officers will intervene and give the landlord a period of time to refund after getting a new tenant,” she says.
Namwanje adds that in order to avoid making losses, you may end up occupying the incomplete since you have already deposited money on it and the landlord has already used the money to start fixing the house.

Namwanje says some tenants tend to ask for too many repairs yet the landlord is not in position to do repairs, which means the landlord will use your deposit to do repairs.
“If you want repairs done, first occupy the house and then ask for repairs,” she advises.
Namwanje adds that some tenants asks for expensive repairs and the landlord ends up investing more money to impress the tenant. In the end, they will find it hard to refund your money they may have borrowed or used their own money to carry out the repairs.

Lack of tenant’s agreement
Judith Mayanja, a tenant, says if you do not signany document indicating that you have paid a commission, the landlord has a chance to claim that you did not pay.
“Make sure you get receipt that you have deposited some money and the exact amount so that even if you are to involve legal officers, you have a written document showing the deposit, date and amount,” she advises.

Terms explained
Acts as commitment fee: Security deposit act as commitment fee by the tenant if is new tenant paying security deposit mean that, that person in ready to occupy your house because some are capable of window shopping.
Keep tenants for long: Some landlord ask for commitment fee because they want their tenants to stay for long, since it is one of their challenge to get genuine tenants.