A holding deposit is legal in most places, but the rules differ sharply. Washington caps it at 25% of the first month's rent and requires written conditions at payment. Oregon allows one only after you approve the application. California counts move-in money against its security cap. In BC, the security deposit itself starts the tenancy. This is information, not legal advice.
What is a holding deposit?
It is money an applicant pays to take a unit off the market between approval and lease signing. If they sign, it usually becomes part of the first month's rent or the security deposit. If they walk, the question is who keeps it.
That question is where disputes start. Most statutes do not use the words "holding deposit". They regulate the same money under other names: a fee to hold a unit, a deposit to secure a rental agreement, or plain security.
What are the holding deposit rules by state and province?
| Jurisdiction | Limit | When it is allowed | If the applicant backs out |
|---|---|---|---|
| Washington | 25% of the first month's rent | After the unit is offered; never for a waiting list | Kept only per the written statement given at payment |
| Oregon | No dollar cap in ORS 90.297 | After you approve the application, with a written statement | Kept if the applicant fails to sign |
| California | Counts toward one month's rent of security, plus first month's rent | No separate holding deposit statute | Governed by the security deposit rules |
| British Columbia | Security deposit up to half a month's rent | Paying it establishes the tenancy | Landlord seeks dispute resolution to use it for unpaid rent |
What does that mean on a $2,000 rent?
In Washington the most you can ask to hold the unit is $500, and the applicant gets a receipt and the written conditions the moment they pay. In Oregon the statute sets no number, but the deposit cannot be taken before approval. In California, whatever you collect at the start of the tenancy beyond the first month's rent, holding money included, has to fit under $2,000 of security for most landlords.
In BC the frame changes. The security deposit tops out at $1,000, and the province says that once the tenant pays it the tenancy is established and you cannot rent the unit to someone else. There is no separate holding stage to manage.
When can you keep it?
Only on the terms you wrote down first. Washington lets you keep up to the full amount if the applicant does not move in, so long as it matches the written statement you handed over at payment. Without that statement, the safe path is gone.
Oregon works the same way in the other direction. If the applicant fails to sign, you may keep the deposit. If you fail to sign, you must return it within four days, in person at your office or by first class mail.
The penalties are small per case and large per portfolio. Washington allows the deposit back plus up to two times its amount, with court costs and attorneys' fees. Oregon allows the amount plus $150. A template applied the same way to 40 units repeats one mistake 40 times.
What goes wrong in practice?
Three things. Taking money before the unit is offered, which Washington bars outright for waiting lists. Taking it before approval, which Oregon bars. And taking it with no written conditions, which makes keeping it hard to defend anywhere.
The holding deposit question usually arrives in a renter's first message, often at night off a listing, and the answer they get becomes the answer you are held to. LetHub's AI voice agent and chat answer rental inquiries in about 30 seconds and book ID-verified showings, so the people asking to hold a unit have already seen it. For the deposit that follows, see our post on security deposit limits, or book a demo.
Holding deposits: FAQ
How much can a holding deposit be in Washington?
No more than 25% of the first month's rent under RCW 59.18.253. You must give a receipt and a written statement of the conditions for keeping it immediately on payment. If the tenant moves in, it is credited to the first month's rent or the security deposit.
Can a landlord keep a holding deposit if the applicant backs out?
Often yes, but only on written terms. Washington allows it when the written statement given at payment says so. Oregon allows it when the applicant fails to sign the agreement. If the landlord is the one who fails to sign in Oregon, the deposit goes back within four days.
Is a holding deposit legal in California?
California has no separate holding deposit statute. Civil Code 1950.5 defines security as any payment, fee, deposit or charge imposed at the start of the tenancy, however it is named, and caps it at one month's rent plus the first month's rent for most landlords.
Can a BC landlord take a holding deposit?
BC does not use one. The security deposit is capped at half of the first month's rent, and the province says paying it establishes the tenancy, so the landlord cannot rent the unit to anyone else. If the tenant then does not move in, the landlord applies for dispute resolution.
