Security deposits are commonplace with nearly every residential lease. Recently, some buildings in Denver have been offering a substitute for traditional security deposits by referring renters to DepositIQ. Instead of requiring a full security deposit, renters have the option of promising to return the unit in good condition and satisfy all rental and financial obligations of the lease by paying a one-time, non-refundable premium for a Surety Bond.
The benefits of DepositIQ include:
- Reduces upfront costs of lease occupancy
- Bond is good for the life of residency
- No wait for a security deposit refund
- Covers the renter up to a certain amount in damages, including a lease-break
- Example: A two-bedroom rental apartment in metro Denver might require a $400 security deposit. A Surety Bond can be purchased for approximately $140 and covers damages up to $750.
Apartment owners can substitute a lower-priced bond for a security deposit, allowing a tenant to move in with reduced upfront money. If anything happens during tenancy, DepositIQ will cover the apartment owner for its portion of the damages. DepositIQ then bills the tenant for what they paid, and even proceeds to collections in delinquency, thus allowing the apartment owner to operate with less liability and relieving them of turnover headaches.
DepositIQ is designed for apartment owners, not renters. While renters pay a fraction of what a traditional security deposit may be, what is paid to DepositIQ is non-refundable. Think of it as apartment security insurance, you pay in money in case something happens, and DepositIQ covers you up to the agreed upon amount in case something happens. Here’s where the fine print screws the renter; If something does happen to the property, DepositIQ will cover you for that amount, and, bill you the difference for what they do cover. So that $140 upfront that you wasted on a Surety Bond could lead to more charges on the way out, possibly leading to a difficult mediation process. At least with a security deposit there is a more realistic chance of getting some or all of your deposit back.
Above all, read the fine print. Have your Attorney read the fine print before you sign a contract. Would you be surprised to learn your apartment owner was receiving some sort of kickback for offering this option? DepositIQ is a shitty deal wrapped in pretty paper. Always do your own due diligence.