Hi Randy.. so many of the folks here do not know about NC

laws and statutes

you an look them up by using the link at the top left, highlighted in blue and have the accurate answer, rather than just opinion

I don't do it often but if I do, here is my contract:

Holding Fee Receipt

This acknowledges receipt of the sum of $ _______ from _______________________________ ("Applicant") as a fee to hold available the rental unit located at ___________________________________________________________________________until __________ 2017 at 5pm.

By such time and date, if Applicant is offered, and Landlord and Applicant both sign Landlord’s Residential Lease Contract, the holding fee will be applied towards the total Security Deposit due of $________and deposited into a Security Deposit Account at Bank in Town, NC.

The offering of a Residential Lease Contract depends upon Landlord receiving a completed Application, proof of income, and satisfactory reports from Applicant's references, rental history and other screening criteria.

Landlord and Applicant agree that if Applicant fails to sign an offered Lease or to pay the remainder of the Security Deposit as agreed, Landlord may retain this Holding Fee to compensate Landlord for lost income from other potential tenants.

This Holding Fee will be returned to the Applicant if the Applicant is not approved as a Tenant. However, if Applicant has provided false information on their Application and this is the reason for dis-approval, Applicant is not entitled to a refund.

The remainder of the Security Deposit is due by ______________________, 2017 or this Agreement is null and void and the Holding Fee shall not be refunded.

First month’s rent of $_________is due prior to occupancy.

____________________________________

Signature of Applicant Date

____________________________________

I use holding deposits all of the time, and have done so for almost 30 years. Its genesis developed because I wanted to effectively screen out the serious applicants from the tire kickers. WMH, I like your contract format, but I would suggest the deposit amount should instead be applied as a credit towards the first month's rent. This would avoid any pretext that it is a security deposit. In my state, security deposit must be returned back to the applicants, should they change their minds and decide not to lease the rental. I take exception to that law, since I had effectively pulled the apartment off the market while the screening process was ongoing - thus turning away other potential prospects. I let the applicants know in advance the following:

- If their application is approved, their "temporary" holding deposit will be applied to the first month's rent;

- If their application is declined, it will be promptly refunded back to them, sans the respective application fee;

The problem is that, in most states, there is no such thing as a "non-refundable deposit" and, in many states, any prepayment is considered a security deposit that can only be used for actual damages.

As said by others above, this should always be called a HOLDING FEE, not a deposit. You can decide all you want to have it apply to whatever if they take the place (first month, S/D, whatever) -- but the issue is going to be when they do NOT take it. In that case, you don't want to be in court arguing over what is and isn't a deposit.

It's a holding FEE. Period. Call it that and don't worry about it.

- John...