I am citing this article for those that are unsure what a letter of credit is.
http://www.meislik.com/articles/art01.htm
Also here is a case where someone denied a possible tennant a house because she didn't pay a cash deposit.
http://www.fairhousing.com/index.cfm?method=page.display&pageid=3441
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5 responses so far ↓
1 David S // Jul 25, 2008
What good would a letter of credit be to a prospective landlord?
2 ibu guru // Jul 25, 2008
Nowhere do landlords accept a "letter of credit." And no state would ever require a landlord to accept a letter of credit. In some states, the landlord is required by law to put the security deposit in a segregated account — no way that could be done with a letter of credit, so a landlord would be prohibited from accepting a letter of credit.
You must have cash, or most landlords will accept a check for the deposit.
3 Janet P // Jul 25, 2008
A letter of credit? Seriously?
No one has ever asked me to accept one, but there is no way in he!! I would even think about that.
In CA the landlord can, should, and usually does require a security deposit. The amount of the deposit is regulated though, it can not exceed 2 months rent.
I read that article, about the section 8 receipant that sued the landlord in CT. CA has very differant laws. For one, the landlord can do as they please with the deposit money, we do not open any accounts or put it into escrow in CA. Also, section 8 does not pay security deposits before or after in CA. The housing authority here would support the landlords need of a security deposit. They do pay 50% of it for disabled tenants, but they pay that in cash, not some voucher that could take months to redeem in order for repairs to be made.
4 abacaxitoo // Jul 25, 2008
If a potential tenant has a "letter of credit" then that tenant can use it at a bank to get cash to give to the landlord.
5 Trouble // Jul 25, 2008
Any landlord would be insane to accept a letter of credit from a tenant, unless it was through a housing assistance program.
It would would not be required unless the credit or guarantee was a form of rental assitance and CA has a "source of income" provision in the housing discrimination statute.
In the case you site, the landlord did not deny the applicant because she did not pay a cash payment. He denied her because she was a a participant in a rent assistance program, which is discrimination.
Under Connecticut state law, it is considered to be a discriminatory act for any landlord to refuse a tenant because they are a participant in that program. The protection comes from the "source of income" provision in the state's housing discrimination statute which says a tenant can not be discriminated against or denied housing simply because they receive a form of rental assistance.
Had the landlord accepted her application and ran credit/court/criminal checks he probably could have found a legal reason to deny renting to her.
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