Frequently asked questions
Otso provides an option for landlords to replace cash deposits in their commercial leases so businesses can put essential capital to work. Our program provides landlords with the strength of collateral they need with A-rated insurance from our partners, Assurely and Accelerant with AM Best Excellent Credit.
Instead of a Tenant needing to put up a cash security deposit or letter of credit at the beginning of their lease, Otso makes it possible for them to keep their cash in exchange for a small deposit waiver fee, which is included in the rent. Otso writes a policy to the Landlord which they can hold as collateral for the Tenant’s good payment in their lease.
Tenants can their cash to work and we allow Landlords to make better credit decisions on leases with reduced risk, at no cost to them.
We are industry veterans of both commercial real estate and technology and just felt like we could make the process of leasing better for both Tenant and Landlord. Commercial real estate is full of antiquated practices (deposits are just one of them) and it’s our mission to set businesses up for more success while providing enhanced coverages against the risks of leasing for Landlords.
We believe the system of collecting and requiring security deposits fail both parties. Landlords are historically not great at making assessments of potential tenants (especially small businesses or entities less than 2 years old) which requires a good understanding of both cash and corporate credit factors.
This leads to inefficient leasing or deals not getting done because the Landlords lack the information to be comfortable moving forward. At the same time, Tenants are being required to put up a large amount of cash, day one, on their lease. This cash sits dead in an account earning no interest and does no one any good. Otso allows Tenants the ability to put their cash to work on their business and Landlords to offload a portion of the decisioning and credit risk of a commercial lease.
For approved Tenants, the policies we provide access too insure the value of security in a commercial lease allowing them to keep cash in their pockets. Essentially we replace the need for cash security.
Landlords get a “same as cash” policy that covers them for 100% of the security deposit’s value in line with the terms of the lease. Every policy is backed by Accelerant, an AM BEST Excellent rated insurer so Landlords can feel confident in the quality of the credit for every policy. The policies are offered in partnership with Assurely, as program administrator.
We cover needs from $1K-$500K in over forty states.
When a landlord needs lease security (and they always do) they typically collect cash or some cash equivalent as their risk mitigation in the event of a default. With Otso, our program allows the Landlord to collect nothing from the Tenant in the form of cash, while still providing the option to secure their leases. Oftentimes we can increase the coverages against default by over 300% per lease!
When a tenant is approved (applications are fast and free, as are our reports) we can offer the option to use the lease insurance program. Our program provides for an A-rated insurance bond that sits as an exhibit to the lease, covering every instance of default the lease does. Tenant’s pay a small premium in rent for this option, as opposed to locking up valuable cash. Otso is not a loan, and nothing sits on the Tenant’s books as a liability, premiums are simply included in the rent.
At the conclusion of a lease, assuming no negative events have occurred there is no obligation to any party. It’s fast, clean and easy to offer Otso and our program has been proven to drive more leasing and better experiences for both Tenant and Landlord.
Otso is not an insurance company, we have partnered with Assurely as program administrator and every policy is backed 100% by a rated and licensed insurance carrier by our partner Accelerant. Accelerant holds an AM BEST Excellent rating.
One of our top priorities is that our landlord customers need to feel secure with a trusted and reputable source to replace their cash or other collateral in a lease.
You can learn more about Assurely and Accelerant here.
We use a method of over 800 factors on both personal and corporate data points to make our credit decisions. If you feel we have reached one in error please contact us and we are happy to chat.
Yes, but the application process will have to be manual (not online application) and will take longer than one day for a decision.
- If your Landlord does not offer Otso, you can contact us and we can help introduce the program to the Landlord or Agent. Otso is 100% free for them and reduces their initial risk on a Lease. You can get pre-approved in advance of selecting a property here.
- If you are a new Tenant, you should receive an application link after you have toured and have expressed interest in a property and the Otso Deposit Free Program can be discussed when you are negotiating your lease at the Letter of Intent stage or before lease signing. The application process only takes a few minutes and your Landlord can offer Otso as an option to waive the security deposit if you are approved.
- If you are an existing Tenant, your leasing team could send you an application link and, if approved, return your existing security deposit cash to you.
Once approved, we send out the documents you need (you can sign them electronically) along with copies to your Landlord letting them know you are approved and that the policy will go into effect if/when the Lease is signed. You negotiate your lease and if terms are acceptable, everything gets signed and you and your Landlord will receive fully executed copies of the policy.
Yes, it’s that easy.
No. The Landlord has the ultimate decision on every lease as they own the buildings you are leasing. However, we strongly encourage them to join and it costs them nothing. Signup for a Landlord is less than five minutes. Contact us and we can help you.
To apply for Otso you must have a minimum of Twelve (12) months in operations for the entity/business you are applying for.
As a general rule, for both prospective and existing Tenants you must have or be seeking a minimum of one (1) year (either new or remaining term/renewal added) on your lease as well.
You must also have an active BIN Experian number (everyone has one!)
Credit and financial requirements are assessed on an individual basis and combine banking, credit and publicly available data to make assessments but generally you should at minimum have the following:
- No active bankruptcy for the entity or personally
- No active/pending lawsuits against the entity
- Minimum 12 months of credit history from Experian.
- Banking history of at least 3 months for the entity in which you are applying for
- At minimum the amount of your deposit (value) on-hand as cash and/or deposit in your primary banking account when you apply for at least the prior 3 months.
If you have questions before you apply feel free to reach out to someone on our team.
If you do not meet some initial requirements, our team will be happy to review your application manually if the circumstances warrant.
Yes. We will pull the credit (hard) on the business, but we do not use personal credit pulls as part of our process. We also collect banking historical data as part of our process.
If you have questions before you apply feel free to reach out to someone on our team.
Your Landlord will receive the application results and notify you. Our application decision takes less than a few minutes in most cases, but plan on the same day to be safe.
In cases where the amount requested is over $100,000, more information is required and we manually review the application, which may take longer than a day.
It is up to the Landlord and you to work out a deal if you want to combine our policy with another security solution.
Our policies do not call for a personal guarantee between you and us. However, these do not replace the lease personal guarantee. Your Landlord may require you to sign a personal guarantee, escrow agreement, construction ride, and many other things we do not cover at Otso. Oftentimes, Otso reduces the need for a personal guarantee for the Landlord since we help them reduce their initial risk.
No money will be owed to us unless there is a default in which case the amount of your policy in an approved claim situation would be paid to your Landlord. We do not inject “new” capital into leases.
For example, in a “normal” lease a Tenant might be required to put up $20,000 cash as a security deposit. With Otso, that business gets to keep their $20,000 instead of having to tie up valuable resources in a wasteful deposit and the Landlord still has collateral.
You pay a nominal fee in your rent as determined by your lease and negotiations with the Landlord.
The monthly fee varies depending on your businesses’ credit, term, and a host of other factors we screen and issue decisions on for policies. As an example, a $10,000 policy amount is typically fee of $50-$75/month depending on how we evaluate your businesses’ creditworthiness. Ultimately the total rent you pay is negotiable between tenant and landlord so it is all within the striking of the deal.
Landlords make a claim to Otso if they believe you have violated your lease by non-payment of rent or other financial considerations/lease provisions you were bound to pay in your fully executed lease.
If these claims are found to be valid, we will reimburse the Landlord within thirty (30) days for the value of the deposit amount covered and seek financial relief through collections and any other means necessary as described in our policies.
Any policy written is a financially binding legal contract and you (and your Landlord) should fully review and approve the documents before agreeing or signing anything (just like your lease!)
- As a LL, it’s 100% free to join. You get a custom application link for every building you own/represent that you can send to any prospect or existing tenant that will assess their financial viability (using bank and business data) in order to understand their financial health.
- Upon receiving an application we notify you of our decision, the applicant’s financial report and the costs of any proposed policy every time.
- You are under no obligation to use Otso even if a prospect or Tenant applies, it is 100% up to you and the Tenant.
- If you move forward, we issue a “same as cash” policy that you (as the LL) and the Tenant sign and there is no longer a need for a cash security deposit. This happens upon signing the policy and sending us a copy of the lease (so we know it was executed).
- If the tenant fails to meet the monetary terms of the lease (non payment) we investigate and pay out the amount of the policy within 30 days as long as you have followed the lease in terms of notifications, cure periods etc.. as it relates to your lease’s determination of default.
Otso works for prospects, renewals and even existing Tenants on any office, retail or industrial asset in over forty (40) states.
It’s a great question!
Cash – can be onerous on the business (especially when the business and projected lease performance is challenging to predict) and often results in sub-par coverage when there is a case of default.
Letters of credit – costly, onerous and result in the cash on hand being locked up for the business, which is not a great situation in most cases.
Here’s Why Landlords Are Leveraging Otso:
- Free tenant financial reports to assist in projecting lease performance
Increasing collateral coverage by having tenants apply for multiple months of rent (in most cases, more than you are having them put down in cash for a traditional security deposit)
- Simple claims process – In a default situation, Otso makes payments in thirty (30) days or less when verified (They cover every instance of lease performance)
- In the current environment, some landlords are leveraging Otso to re-allocate on file deposits to rent for tenants who need assistance
- Our policies are backed by a A-rated insurer with over AM Best Excellent credit. Replacing an unknown credit mix with that level of comfort is a major positive.
You do NOT have to use Otso for every tenant. Think of us as a new tool in your box. It’s why we call it the “Otso Option.”
In fact, you can decide to not offer the policy even if the Tenant gets approved.
It’s always a Landlord and Tenant choice.
Our goal is to simply give tenants, landlords, and brokers an opportunity to close the gap on a deal in a new way.
Tenant financial reports are FREE and you can use them on every Tenant without obligation to offer the Otso option.
After a lease document is fully executed, which includes the policy that is executed from the Tenant and the Landlord.
Typically your lease clause related to the security deposit will be inserted/amended to outline the security deposit program and Otso Assurely Policy as an exhibit. The language or amendments needed are usually very short but your attorney will guide you.
Your attorney can help (and should draft) language for this but here is a sample for a new lease and amending an existing lease (and reallocating the deposit as rent) as an example only.
“Landlord and Tenant elect to use an Otso Assurely Surety Policy as collateral for good performance in this Lease, all provisions of the Lease and obligations of the parties are in full force and effect. See Exhibit “X” (whatever is required) for terms of Policy.
For Amending an Existing Lease:
“Section XX (Security deposit clause) in Lease is hereby deleted and replaced as follows: Landlord and Tenant elect to use Otso Assurely Surety Policy as collateral for good performance in this Lease, all provisions of the Lease and obligations of the parties are in full force and effect. See Exhibit “X” for terms of Policy. Additionally, Landlord and Tenant mutually agree to apply the existing deposit of XXX (amount) towards base rent for months of (XXX). Rent and Expenses are due normally after these amounts are applied.”
We do not provide legal advice and this should not be taken as such, these examples are for illustrative purposes only and we strongly recommend engaging the services of an attorney for any lease documentation or amendments.
Otso covers whatever is in line with your existing lease which could be monetary, non-monetary, or damage-related defaults.
Otso helps you get your deals done faster. Whether you are representing a Landlord or a Tenant, the current security deposit system is slow, poor at assessing creditworthiness, and really fails to work for anyone.
Recommend us to your clients, it’s 100% free for Landlords to join and once a Landlord is in the program they are under no obligation to use us on every deal. It’s always their choice.
Making claims and getting reimbursed is a fast and easy process for Landlords. Our goal is to process any claim quickly and get you compensated for any default that is verified within thirty (30) days of a claim being made. To streamline the process and to assist with verification we ask that you provide the following as a minimum to any claim:
- Proof of state of default to Tenant and any additional actions (whatever the steps your specific lease outlines, like notices etc…)
- Accounting records showing lack of payment.
- Copies of all notifications and correspondences made to Tenant to show that the Lease process for notifying a default was followed, along with any cure periods that have expired.
These documents can all be electronic and we provide you with a custom, secure link to upload them. Once our team completes its investigation (we may ask you for more information) we issue you a check and go to seek collection from the business as a defaulting tenant. We outline this process in our Policy Documents fully as well, you can find more information in our sample agreement. Please contact us to have one sent to you for review.
What if I don’t get approved for the whole amount?
We do make partial approvals, it is up to the Landlord and you to work out a deal if you want to combine our policy with another security solution.
Does Otso cover tenant improvements or commissions?
Yes! We strictly cover the value of the security deposit the Landlord is seeking AND what is approved by us.
Does Otso work like a pre-qualification letter?
Sure! We have Tenants come and apply, get approved and then use that approval to negotiate a better lease. Showing your Landlord they have less risk in leasing with you is NEVER a bad thing 🙂
Can I cancel the policy?
Yes, with landlord approval at any time with thirty days notice you can cancel. Be sure to make arrangements with your Landlord however as without the policy in place you will be in default if you have not worked out something to their satisfaction.
What does a Landlord get with Otso:
Glad you asked, here are the benefits to a Landlord in our program:
-100% Free for life of a Landlord’s Membership (as many buildings as they want)
-Otso handles all of the credit-decisioning for you (and we’re good at it)
-Tenants get a customized secure link for every building you have
-Decisions are made in less than 60 seconds. We always tell you why they are/are not approved.
-When approved, all documents are signed electronically so it’s fast
-Replaces an unknown risk with $2.5B Insurer, Accelerant.
-Monthly monitoring of every Tenant in the program with a live policy
-If a claim is made we approve and pay out within thirty days, same as cash.
-Does not replace escrows, personal guarantees or other risk-reducing measures a Landlord can use.
-It’s always your choice, even if we approve you can work your deal your way. Every time.
It’s an option for Landlords when they want it, but we don’t require any exclusivity or lifetime contracts. Use Otso when you want.
As a Landlord, how many buildings can I add?
As many as you want, at no cost, as long as cover the area where the building is located. We’ll create a custom link for each that you can always find here or contact us.
As a Landlord, what if I signed up but the person who signs leases on our building’s behalf changes?
Let us know, we will need to modify your new policies accordingly.
As a Landlord, what if I sell my building?
The policies go with the building and landlord so it would be transferred just like the value of a security deposit would be at closing to the new owner. Let us know, however, so we can have the policies updated to reflect the new ownership and authorized signer.
Do I have to change my lease language if I want to use Otso?
We recommend you do. Here is some sample language you can potentially use. Have your attorney approve before doing so! Landlords and Tenants should ALWAYS have a lawyer draft the entire lease and approve for each party.
“Tenant has elected to enter the Otso and Assurely security deposit program. The policy and it’s requirements are attached to this lease. Tenant understands that it is solely responsible for payments to Otso and if at any time the policy is lapsed Tenant will be in default of this Lease.
Landlord has agreed to waive a cash deposit in replacement for the security deposit value “X dollars” of the policy attached. Tenant understands all clauses and responsibilities related to this lease, Otso and the Landlord are at their sole cost and expense as well as their sole responsibility. This policy only covers the value stated in the policy, for the purposes of securing this lease and monetary defaults and does not replace any personal, corporate, letter of credit, escrows or any and all other guarantees Landlord may require as a part of this Lease. This policy does not replace any of the existing non-monetary or monetary default clauses in this Lease in any way. In the event of any default Landlord will have all remedies available to it pursuant to the terms of this Lease and the Policy.
See Exhibit “X” for Policy terms and conditions
What happens if I cannot pay my Landlord the rent agreed upon?
Every lease is different but if you are ever put into a formal monetary default situation or a bankruptcy/eviction state with your Landlord they would be able to make a claim to us for the value of the security deposit we have issued on your behalf. We will make all reasonable and legally available efforts to collect on the value directly with you. You can read more about this in our policies.
How do you track the Tenant’s credit during the lease?
We use a variety of methods but do not make additional “hard pulls” of your business credit on a consistent basis. Depending on the state of your business we do reserve the right to assess your creditworthiness on an ongoing basis.
Do you do this for apartments or residential leases?
That all sounds super cool…how do you say Otso?
Thanks! We don’t mind, most of us pronounce it “Oat-so” 😉
Contact us anytime for questions or assistance, we are here to help!
Have more questions?
Whether you have a question about our services, need assistance or just want to talk, we want to hear from you.
Contact our support team.