Is there an Alternative to Paying a Security Deposit?


As the cost of renting a property increases, interest in an alternative to paying an upfront security deposit is growing. Everyone wants to hold onto their cash if possible, so tenants are no different. The ability to keep one months rent in the bank provides a helpful cushion for savings and emergencies. In order to meet this need, companies are introducing new services. One company is Obligo.


Traditionally, a tenant pays a security deposit at move-in before there is any reason to pay their property manager. With Obligo, the tenant does not pay an upfront deposit but is still responsible for payment if their property manager submits a charge after move-out. While collecting appears doubtful since no money is set aside to pay the property manager, Obligo solves this problem through the use of its Obligo Billing Authorization.

Obligo Billing Authorization

The Obligo Billing Authorization is an agreement that authorizes Obligo to withdraw a fixed amount of money from a tenant’s account if their property manager submits a charge after move-out. As explained on Obligo’s website, the amount of money is usually the same amount as a Security Deposit.

Once a property manager and the tenant agree to use the service, Obligo completes the following actions.

Property Manager

  1. Performs financial checks to ensure the legitimacy of the property manager and any related companies.
  2. Reviews the property manager’s resident screening criteria and deposit deduction history.
  3. Determines if the property manager and related companies meet the Obligo standards.


  1. Confirms that tenant meets their property manager’s screening criteria.
  2. Collects, connects, and authorizes two billing methods. Generally, a credit card (not debit) and US bank account are required.
  3. Runs a credit check for additional screening if necessary.

The Obligo Process


Once the Obligo Billing Authorization is active, it will remain so until after the lease expires. If a property manager submits a claim against a tenant, Obligo controls the flow of money from the tenant to the property manager. The process includes the following:

  1. Property manager’s claim is paid by Obligo.
  2. If the tenant does not dispute the charges, Obligo accesses tenant account for repayment.
  3. If the tenant disputes the charges, the tenant asks for repayment to be deferred even though the property manager has been paid.
  4. Disputes between tenant and property manager are handled in accordance with local laws.
  5. Repayment is be made to Obligo in monthly installments if needed.


unrecognizable man holding wallet with money
Photo by Karolina Grabowska on

Obligo charges a monthly fee for each active Billing Authorization. The monthly fee depends on the authorization’s size. Also, the risk profiles of the property manager and the tenant affect the monthly fee.

See more information about Obligo

See more information about Rental Fees

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