Dear Heather: I have rented out my property and the agent who I employed on a finder’s-fee basis took the deposit (equivalent to one month’s rent). She is still holding it, shouldn’t I be holding it? — Bermuda Landlord

Dear Bermuda Landlord: You are absolutely correct, you should. In our office we collect the first month’s rent and the deposit, usually equivalent to one month’s rent unless it is under rent control (ie ARV $27,000 or less) which is one-half month’s rent in accordance with the Rent Control Act. We also collect the tenant’s portion of the stamp duty on the rental lease agreement which is a figure based on the monthly rent. Once the terms and conditions of the lease have been agreed and all parties have signed, we hand the deposit over to the landlord so he can hold the required amount as a damage deposit during the term of the lease. He will refund this to the tenant at the end of the tenancy provided the apartment or house is left in good order. If it is not, it is used to paint and/or repair the property as needed. We retain the first month’s rent as our finder’s fee.

Dear Heather: I am currently renting and starting to look at buying a house. Everyone says I need to be able to put money towards a down payment. Do they mean a deposit? Are they the same thing? — Confused

Dear Confused: Making the move from tenant to property owner is a daunting task. People often get confused regarding the terminology and also the amount of money needed. A deposit on a house is given to the seller’s agent or lawyer in order to secure the property you wish to buy, together with the sale and purchase agreement, which is signed by both the buyer and the seller. At the end of the day it will make up part of the purchase price of the property.

The down payment is not really on the house, it is on your loan or mortgage. Typically, the banks are looking for at least 20 per cent to 25 per cent of the purchase price as a “down payment”. So, for instance, if your house cost $1 million, the bank would be looking for you to pay a cash down payment of at least $250,000. Then, providing the house appraised at $1 million, they would (if you qualify) lend you the other 75 per cent, in this case $750,000.

Keep in mind you will need another five per cent or so cash for expenses like lawyer’s fees, stamp duties on the mortgage and the conveyance, finder’s fees for the banks, moving expenses and incidentals.

Happy house hunting!

Heather Chilvers is among Coldwell Banker Bermuda Realty’s leading sales representatives. She has been working in real estate for 25 years. If you have a question for Heather, please contact her at hchilvers@brcl.bm or 332 1793. All questions will be treated confidentially.