"Holding Fee" not being refunded

[Ryan Chaney]

Jurisdiction

Virginia

I recently applied for a townhome which is still under construction. During the application process I was asked to pay a $500 holding fee to reserve the unit until the lease began. The WAS a page during the application process that stated "if any applicant notifies owner or its agent that it has elected to withdraw an application or has elected to not go forward with renting the dwelling unit, owner is entitled to retain the Application Deposit as liquidated damages and the parties will have no further obligations to one another". However state law (https://law.lis.virginia.gov/vacode/title55.1/chapter12/section55.1-1203/) seems to contradict this. I am pretty sure I am just going to be out of the money, but thought I would post and see if anyone had an opinion on what could be done. The reason we are no longer interested is that there has been somewhat of a life change which is going to require more room than the unit would provide. Thanks in advance!

 

[justblue]

I recently applied for a townhome which is still under construction. During the application process I was asked to pay a $500 holding fee to reserve the unit until the lease began. The WAS a page during the application process that stated "if any applicant notifies owner or its agent that it has elected to withdraw an application or has elected to not go forward with renting the dwelling unit, owner is entitled to retain the Application Deposit as liquidated damages and the parties will have no further obligations to one another". However state law (§ 55.1-1203. Application; deposit, fee, and additional information) seems to contradict this. I am pretty sure I am just going to be out of the money, but thought I would post and see if anyone had an opinion on what could be done. The reason we are no longer interested is that there has been somewhat of a life change which is going to require more room than the unit would provide. Thanks in advance!

That code doesn't apply to your circumstance. You chose not to take the townhouse and are out the holding fee.

 

[Zigner]

I tend to agree with you that the holding fee cannot be retained in full. The clause in the agreement appears to run contrary to state law. You may wish to consult with a local attorney about the matter - I'm sure there are tons of attorneys advertising their services to tenants. You don't have to hire one, but you can ask for general info.

 

[Zigner]

That code doesn't apply to your circumstance. You chose not to take the townhouse and are out the holding fee.

I disagree...I feel this would be an application deposit, no matter how the LL tries to spin it.
(from the OP's link)

§ 55.1-1203. Application; deposit, fee, and additional information.
A. Any landlord may require a refundable application deposit in addition to a nonrefundable application fee. If the applicant fails to rent the unit for which application was made, from the application deposit the landlord shall refund to the applicant within 20 days after the applicant's failure to rent the unit or the landlord's rejection of the application all sums in excess of the landlord's actual expenses and damages together with an itemized list of such expenses and damages. If, however, the application deposit was made by cash, certified check, cashier's check, or postal money order, such refund shall be made within 10 days of the applicant's failure to rent the unit if the failure to rent is due to the landlord's rejection of the application. If the landlord fails to comply with this section, the applicant may recover as damages suffered by him that portion of the application deposit wrongfully withheld and reasonable attorney fees.

 

[adjusterjack]

thought I would post and see if anyone had an opinion on what could be done.

Send a letter demanding your money back. Attach a copy of the statute and see what happens. If the LL doesn't comply you decide whether or not to go to small claims court.

 

[zddoodah]

I recently applied for a townhome which is still under construction.

Applied to rent it, correct?

but thought I would post and see if anyone had an opinion on what could be done.

There probably dozens of things that "could be done," including proceeding with the rental, letting it go, arguing with the landlord, suing in small claims court, etc.

That code doesn't apply to your circumstance.

I don't understand the point of writing this but not explaining the rationale.

Section 55.1-1203 appears in Chapter 12 of Title 55.1 of the Code of Virginia. Section 55.1-1201(B) expressly states that "[t]he provisions of this chapter shall apply to occupancy in all single-family and multifamily dwelling units . . . located in the Commonwealth." Section 55.1-1201(C) includes a list of "tenancies and occupancies [which] are not residential tenancies under this chapter," but none of the seven circumstances listed are similar to the OP's circumstance. So why do you believe section 55.1-1203 "doesn't apply to [the OP's] circumstance"?