Security deposit alternatives: what renters need to know
Your building may offer a way to move in without an upfront deposit. Here is how the options differ, what to ask, and what you are agreeing to.
For residents · 5 min read · Published , updated
More buildings now offer a way to move in without handing over a full deposit. The options sound alike and work very differently. Here is what sits behind each one.
The three models
Deposit insurance
You pay a premium, monthly or once, for a policy that covers the landlord. The premium never comes back. If the landlord claims at move-out, the insurer reviews it against the policy's exclusions and pays what it decides to pay. Depending on the policy, the insurer may then pursue you for what it paid.
A surety bond
You pay a bonding company a one-off premium, usually a slice of the deposit amount. The company guarantees the deposit to the landlord. If the landlord claims, the bonding company pays and then collects the full amount from you, plus costs.
A deposit certificate
This is what Standby issues. You pay a small fee instead of the deposit. Your building holds a certificate for the full deposit amount. If you leave owing money at move-out, the building draws on the certificate and you repay Standby that amount, and only that amount. Leave the place as you found it and you owe nothing.
What to compare
- What comes back. A cash deposit comes back, less deductions. Premiums and fees do not. Decide whether having the cash in your account for a year is worth more to you than the fee.
- The most you can owe. With a certificate you repay what the building itemises, up to the deposit amount, and nothing else. Ask any provider for that number in writing.
- How a charge is disputed. With Standby you dispute a deduction with your building, exactly as you would with a cash deposit. Nobody new enters the conversation.
- Your credit. Standby runs a soft check, which does not affect your score. Ask whether other providers do the same.
- Whether you have a choice. With Standby you always do. Cash is an option through the same link.
Questions worth asking your leasing office
- Is this insurance, a bond, or a guarantee certificate?
- What is the fee, and does any of it come back?
- What happens at move-out if I owe nothing?
- What happens if I owe something, who do I repay, and how do I dispute it?
- Can I pay a cash deposit instead?
What you are agreeing to with Standby
You keep your cash. You pay a small fee that is not a deposit and does not come back. You only repay what you owe at move-out. And you can choose cash instead, any time before you sign. If your building has sent you an invite, the whole thing takes about three minutes on your phone.
More from Resources
The security deposit is one promise wrapped in a lot of machinery. Here is what it costs residents and operators, and what a deposit management system changes.
Where the money moves when an operator stops running cash deposits: move-in, administration, occupancy, risk and cost.
Vacancy is the most expensive line on a multifamily budget. Five levers that move it, including the one at the leasing desk.
Never worry about deposits again.
Twenty minutes with us and you will know whether it fits your portfolio.