Before we can truly dive in to this question, we need to understand what the difference is between a security deposit and a move-in fee.
A security deposit, by definition, is a charge incurred by renters, typically in the amount of one month’s rent. This money is collected as a sort of insurance policy for the landlord should the tenants of his/her property cause damage to the unit or building being occupied. The money is held in a standalone bank account that must bear interest for the duration of the time a tenant occupies a rented unit. Upon move out, a tenant is returned their deposit in full, provided the unit is returned in the same condition it was received (save for any normal wear and tear).
Should the unit have outstanding damage, a landlord has the right to deduct reasonable expenses from the deposit, in order to bring the property back to the way it was prior to occupancy.
That’s a mouthful, right?
In order to circumvent some of the strict laws regarding how security deposits are held and managed, landlords have a way around this by instead charging a move-in fee. These are typically non-refundable and are much lower than security deposits (anywhere from $200-$500 in Chicago). These fees can be per person occupying the unit, or once for the actual unit itself, depending on the landlord.
This shift in the collection of fees from landlords began when property owners with multiple properties (15-5000+ units) began having difficulty managing so many individual accounts.
So, it sounds like I’m just putting more money into my landlord’s pocket – how does this benefit me as a tenant?”
There are several things to consider about move-in fees.
- Your money is not tied up in someone else bank account like it would be if you went the security deposit route.
- Less money out-of-pocket for you when moving in.
- The landlord cannot deduct from your security deposit for every minor thing until it is fully depleted, ultimately costing you more money than the small fee.
- The longer your occupy a unit, the less this fee essentially costs per month over the course of your stay. (i.e, a $250 move-in fee is a net charge of $21/month over a one year lease, but nets just $7/month after three years of occupancy).
- These fees help keep your unit and your building looking great. Think: painting the unit after another tenant moves out. Deep cleaning the baked-on grime in the oven, unclogging hair from the drain, re-keying the unit for your security, touch ups to the common areas from furniture hitting the walls during moves. The list could go on and on!
In the end, there really are benefits for both parties. It’s all about perspective and increasing your awareness. That’s where I come in; I’ll make sure there is light at the end of this long apartment-hunting tunnel.
xx
Cory
According to Cory 