Tenants can suggest to the landlord that in lieu of a cash security deposit that the landlord accept a letter of credit. A letter of credit will state under what conditions the bank will pay the landlord. Tenants can negotiate the terms of the letter of credit and may want to have the option of substituting a cash deposit in the future. Banks will charge for the letter of credit and expect collateral and it will use up some of the tenant’s credit limits.
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