I was looking at apartments a year ago, and found the "perfect" apartment online. However, I couldn't go look at it until the following weekend. Unfortunately, the apartment had already been listed for a while, and I was worried that someone would grab it before I had a chance to look at it. I asked my locator agent if there was anything I could do. She looked into it and told me that I could temporarily put a hold on it until I had a chance to look at it. I agreed and put down the roughly $300.

Fast forward to the following day, I still haven't looked at it or anything, but I get a call from the property saying that my keys were ready. WTF? I explained the situation to her and she informed me that not only did I apply for the apartment, but the nearly $300 I spent were a non-refundable admin fee for applying, not a hold. Needless to say, I called my locator confused. She told me that she was sorry but that she must have misunderstood and there was nothing she could do...

I called my bank, told them the whole story, and they opened an investigation into it as a fraud case. A month or so later I got a letter from the bank saying that they agreed it was fraud and refunded the money in full.

However, that was not the end of the story. Fast forward to a few months ago, and I started getting called from a collection agency collecting the $300 on behalf of the apartment complex. I initially ignored them, big mistake, and there is now a collection for $300 on my credit profile.

Let's get the easy stuff out of the way. Yes, I am young and an idiot who doesn't understand what I'm spending money on and that's why these things happen to me. I'm not even mad or anything because I know I'm an idiot and this is all my fault.

Having said all that, this is hurting my credit and I'd like to do something about it ASAP, but I'm not sure where to begin.

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    So why didn't you end up taking the apartment? You said it seemed perfect. – Eric Jul 26 '15 at 12:06
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    @Eric: Probably because it seemed perfect right up until he found out they were running a scam. That would have put me off it no matter how nice the place looked physically. – Mason Wheeler Jul 26 '15 at 13:25
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    I understand, no license means no rules, no oversight. And no accountability between the locator and her clients. I am a licensed real estate agent in Massachusetts. The locator would be illegal in my state. – JTP - Apologise to Monica Jul 27 '15 at 0:57
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    Ignorance is not the same as idiocy OP. You followed someone's advice in good faith and it's the locator who is either incompetent or deceitful. The lesson to take away from this is not to think yourself an idiot but, in the words of Baz Luhrmann, to be careful whose advice you buy. – Lilienthal Jul 27 '15 at 9:15
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    @Soviero the locator didn't misunderstand you, you misunderstood the process. Why would anyone give up rent by holding an apartment for nothing? Even if it was a payment for a temporary hold not an application you still wouldn't expect the money back. – JamesRyan Jul 27 '15 at 11:01

10 Answers 10


I don't know the details of whether or not you should pay this money, or who is at fault. But clearly, you believe that you do not owe the money, and the bank investigation seems to agree with you, since they gave you your money back.

Since you have your money, and they haven't sued you, the only issue yet remaining is your credit report. Here is what I would suggest.

First, make sure you check all three credit reports, to see which reports the collection appears on. Then dispute the report with each credit bureau reporting the problem. There is an article on CreditKarma that explains the process. When you file your dispute with the credit bureau(s), they will investigate. This usually involves asking the creditor for proof of the debt, and if you didn't sign anything, they probably won't have any proof. Hopefully, the credit bureaus will come to the same conclusion as the bank did, and remove the collection from your credit reports.

In my opinion, it doesn't make sense to pay them now, if you don't believe you owe it. Paying them won't remove all the bad stuff from your credit report (but it will improve it), and you don't want to pay them and then immediately sue them.

If, however, the credit bureaus side with the landlord and leave this on your report, paying the $300 is better on your report than leaving the "unpaid debt" on there.

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    As @BenMiller said, if they don't have your signature on a lease agreement, they have no standing on which to claim you owe rent. Hopefully you have a copy of the paperwork you signed w/ the "Locator" (hereafter referred to as "scam artist") and can verify that it does not legally obligate you to occupy or pay for the apartment beyond your initial expenditure. – Doktor J Jul 28 '15 at 7:19
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    Right. Ask the collection agency to send you written evidence that you owe this money. If they take you to court do not skip the court date. Instead show up, and before the judge, ask the plaintiff to present the evidence that you owe the money. You may be able to skip going before the judge if you tell the plaintiff's attorney you're going to ask for the written evidence. If he doesn't have any he'll drop the claim and you'll be done. But if you skip the court date you'll have a default judgement against you. – O. Jones Jul 29 '15 at 19:58

"[My locator] told me that she was sorry but that she must have misunderstood and there was nothing she could do." Your locator owes you $300.

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    That may be the right answer. Pay it off, make sure it gets taken off your credit record, and then if you want to make the effort, take the locator to small claims court for giving you bad advice. – keshlam Jul 26 '15 at 20:15
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    And it sounds like the locator is paid by the complex, and does not act as your agent but theirs. In this case the locator's signature should not bind you. How the original $300 has doubled is not clear ? I would not like to think the agent as both forged your agreement and pocketed your money ? – mckenzm Jul 27 '15 at 10:10
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    @mckenzm - never attribute to malice that which can result from mere incompetence. <g> – Pete Becker Jul 27 '15 at 14:10
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    @PeteBecker: Sufficiently advanced incompetence is indistinguishable from malice. – Mason Wheeler Jul 27 '15 at 18:32
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    @CQM: It's a half-serious joke, a reference to Clarke's Third Law. – Mason Wheeler Jul 28 '15 at 14:37

All three credit bureaus allow you to file a dispute online. Some allow you to upload documentation at the same time, others will ask you to mail it to them. Send them the letter you got from your bank, they will then return to the collection company.

For $300.00 most likely they will not pursue it any further and the credit bureaus will delete the entry from your file. If the collection company want to make a case out of it they will have to view to cost of trying to get a Court Judgment against the value of the amount they are claiming. Almost certainly they will view at not cost effective and your credit rating will return to where it was prior to the negative impact

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  • It drops off after two years usually – Brian Jul 29 '15 at 14:52

First of all, whatever you do, DON'T PAY! Credit reporting agencies operate on aged records, and paying it now will most certainly not improve your score. For example, let's say that you had an unpaid debt that was reported as a "charge-off" to the credit bureaus. After, say, six months, the negative effect on your score is reduced. It is reduced even further after a year or two, and after two years, the negative effect on your score is negligible.

Now, say you were to pay the debt after the two years. This would "refresh" the record, and show as a "paid charge-off". Sure, now it shows as paid, but it also shows the date of the record as being today, which increases the effect on your credit drastically. In other words, you would have just shot yourself in the foot, big-time.

As others have noted, the best option is to dispute the item. If, for some reason, it isn't removed, you are allowed to submit an annotation to the item, explaining your side of the story. Anyone pulling your credit record would see this note, which can help you in some instances. In any case, these scam artists don't deserve your money.

Finally, you should check who is the local ombusdman, and report this agent to them. She could lose her license for such a practice.

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From the apartment owners perspective what was the purpose of $300? They promised they wouldn't rent it to somebody before you had a chance to see it. But lets say you did see it, and decided you didn't like the view. Would they have to give the money back? if so, why would they promise not to rent it if somebody showed up first?

I would have made it clear, as the owner, what the money was for. It was a $300 fee to delay rental. You would have essentially bought x number of days of delay. You could view it as a mini-short-term rental. Of course there should have been paperwork involved. There should have been been a receipt that at least mentioned the amount of money involved.

You may need to pay the amount owed, and may need to determine if you want to sue in small claims court. Of course your agent may have some liability based on your contract with them and any paperwork they signed when the money was sent to the owner.

The fact that the bank sided with you doesn't mean the courts will.

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    The difference between an application fee and a hold is not always clear. In most cases the non-refundable fee is a commitment to rent and is forfeited if you cancel, specifically to compensate the landlord for the possibility that they lost a month of rent because they had to turn someone else away. Check your paperwork if there was any, but I suspect that it was indeed your responsibility to tell them you weren't taking the place. – keshlam Jul 26 '15 at 14:26
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    It sounds like he didn't sign anything, so... no. – Lightness Races in Orbit Jul 26 '15 at 17:15
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    If he didn't sign anything, "customary" tends to win, and since this is a VERY well-established practice I suspect he's out of luck if it goes to court. Might be worth trying, but that depends on how much it will cost you in lost work hours, lawyer's fees it it can't be handled in small-claims, and the like. Sometimes the right thing to do is to consider it a tuition fee for learning not to make the mistake again, pay it so it goes away, and move on with your life. – keshlam Jul 26 '15 at 19:16
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    @keshlam in hindsight I don't even mind paying it, I just want it off my credit. – Soviero Jul 26 '15 at 19:58
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    Yes. The whole point of such a "hold" fee is that you are giving the owner some money to hold the apartment for you, whether you ultimately decide to rent it or not. I wouldn't expect to get that money back if I chose not to rent. If that was the deal, why would the owner agree to it? If he turns away another tenant while waiting for you, and then you decide not to rent, he's lost a tenant. He should get SOME compensation for that risk. Hence a hold fee. If he's going to give it back if you don't rent, why collect it at all? In any case, it sounds like there was a mis-understanding here: ... – Jay Jul 27 '15 at 5:05

Ben Miller offers you sounds advice. However, if it comes down to it I would reach out to a lawyer to negotiate this for you. If what you are presenting is true then you could easily sue them for the damages incurred. I have been in a similar situation and unfortunately using the lawyers is what was required to get the solution resolved. Based on my previous experience a simple letter from a local lawyer office would get this dropped pretty quick and should cost you around $150. Best of luck!

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    Landlords have rules they must follow, and are subject to triple damage if they break those rules. I agree it's time to talk to a lawyer. – JTP - Apologise to Monica Jul 27 '15 at 18:59

The debt collection agency needs to see a copy of the notice from the bank that the $300 charge is a disputed and fraudulent charge. Also require them to provide proof. To reduce your stress, you should contact a lawyer to handle the debt collection agency. Disputing the information on your credit report is exactly the way to "fix" that issue. All they need to see is the bank letter stating that the charges were fraudulent. The credit reports should show that item as disputed for at least a month if not remove it entirely. The bank should be able to provide with copies although you may have to pay a research charge if the information is old enough. I recommend talking to your local branch manager to get what you need.

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If I understand correctly you describe putting a hold on an appartment as such:

A sum of money that you give to the owner of the appartment to let them hold it for you because you are probably going to rent. In case you back out of the deal, this money can mitigate the expected loss from turning down other candidates.


After asking them to hold the appartment for you, you decided not to rent. Also, you used the bank to get back the hold sum.


Regardless of the legal details, it seems very clear to me that after putting down a hold and walking away, you should not get the money back.

There may have been some things that distracted/confused you (call about the key), but if you actually look at the things that happened it seems both right and practical to pay them their reclaimed hold as soon as possible.

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    This seems to be a question of bad faith, though. He set down the money with the intention of holding the apartment, but the apartment managers did not accept it as intended, and instead tried to use it, without his consent, as something else. Therefore, the hold was never placed and he's under no obligation to leave his money with a bunch of people who tried to scam him, even though he would have left it with them if they had dealt fairly with him. – Mason Wheeler Jul 28 '15 at 14:01
  • Interpreting the $300 as a deposit would've been reasonable as well. – SQB Mar 28 '17 at 9:52

STEP #1. Get a copy of whatever you have signed, this is the most important step.

STEP #2. Find a reference to the landlord/tenant laws for you city, county and or state if there are any.

STEP #3. Google for a tenants union in your city, state or county. ie, Washington State Tenants Union

STEP #4. Try get a free consultation, or an affordable consultation with a lawyer in your area who specializes in tenant law.

STEP #5. Between the tenant laws for you, and the limits of what you have signed try to negotiate a cancellation of the contract, if you are bound by it.

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Just pay it, its not alot and it will clear up your credit report.

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