I am subletting my place to someone on craigslist for the first time. The potential tenant and I have a dilemma.

The tenant does not want to give me a check (with a security deposit and first months rent) until I give them the keys and they move in. The tenant is concerned that I will run off with the check and not provide a room if they give it to me before they move in.

However, my concern is that the tenant gives me a check that won't clear. The tenant could squat in my house or steel my belongings. Having the security deposit beforehand would help protect me from this.

How should I proceed in this situation? What is the best practice? Is there a good way to ensure the tenant I am not going to defraud them?

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    Also keep in mind that beyond the first month, this will be a risk you face every single month that you have a renter. The renter could stop paying, requiring you to perform legal actions to evict them. In the meantime, they could damage your property, etc.. You absolutely must look into the laws surrounding the renter / landlord relationship in your jurisdiction, as there will be clear guidelines in place as to what you can do in such a situation. In some jurisdictions, a renter must be more than 1 full month behind in rent to be evict-able (as an example). – Grade 'Eh' Bacon Jan 10 '17 at 14:32

It is very common to expect a deposit in advance of the move in (3 weeks or so is what I've experienced). This covers your exact concerns. If the potential tenant is already balking at meeting this rather simple criteria, and likely one they'll encounter with other rentals, then you may want to move on. You're in control of the situation and must do what makes the most sense for you. If you're already worried about people stealing your stuff, maybe renting out to strangers isn't the best bet (not that non-strangers couldn't potentially steal from you as well).

Alternatively, tell them they need to pay in cash if they want to move in the same day as making the deposit. No need for a check to clear in that case. Document the transaction and provide a detailed receipt so that there are no arguments about it later.

You could also get a credit check run on the new tenant. There are fees associated with that, and availability to you may depend on where you live. It's also not uncommon to pass those fees along to the tenant as part of the application fee.

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    This is a good answer, but I'll add from my own experience that instead of providing cash when receiving keys, you could also require the renter to provide you with a bank certified cheque. This guarantees that the money is available for you [assuming it is not a fake certified cheque, but you can confirm this by making the transfer at the renter's bank, where they could confirm the legitimacy of it], but it also provides the renter with a clear paper trail that the money is actually transferred. – Grade 'Eh' Bacon Jan 10 '17 at 14:29
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    Money order is another good alternative to cash. – Myles Jan 10 '17 at 14:34
  • @Grade'Eh'Bacon and Myles - I agree, however I left those options out specifically because of the OP's apprehension regarding fraudulent activity. Faking a certified check or money order is certainly a possibility and not something the OP would figure out until after handing over the keys and letting the tenant move in, based on the aforementioned tenant request. Cash really is the only option that is as close to guaranteeing no fraud as possible. The paper trail should be covered with appropriate receipts and transaction documents, and the tenant should know how to protect themselves. – BobbyScon Jan 10 '17 at 14:43
  • @BobbyScon I agree with your points, and cash is clearer, but as I said in the comment, you can guarantee the validity of a certified cheque by making the key transfer at the renter's bank and having the bank confirm that the cheque is real right in front of you. The reason I say this might be better, is because from the renter's perspective, there is less chance of fraud due to the paper trail created. 'Appropriate receipts', if created by the landlord, would be less clear than something identifying the bank account where cash was deposited. I'd never hand a landlord cash, but that's just me. – Grade 'Eh' Bacon Jan 10 '17 at 15:10

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