Potential Renter backed - do I have to return the holding deposit?

[fauve4]

Potential Renter backed out - do I have to return the holding deposit?

NH

After accepting an applicants application, he gave me a deposit to take the unit off the market. After turning away 2 sets of other tenants and after about a week and 1/2 of back and forth on the lease, I was informed he no longer wanted the apartment and that he wanted his deposit back. I told him the deposit was non-refundable but that I would pro-rate a refund based on my actual rental loss. I showed the apartment over the weekend and found a set of new tenants to move in for the following Month (4 days early) I sent a refund check less 22 days rental loss. He is now taking me to small claims court for the full amount. I did not provide him with a receipt for the holding deposit so there is nothing in writing indicating it was non-refundable but I did indicate that it was to take the unit off the market and to turn away the other candidates. I'm wondering what my legal rights are... do I have the right to hold onto the deposit or do I have to return it? I would prefer not to have to go to court... but if I am legally entiteld to hold on to a portion of the deposit I will go in the principle of the matter. Thanks in advance for your advice. I've been told it's somewhat of a gray area but I"m wondering if anyone knows what the actual law is on this?

 

[ENASNI]

oy

I cannot find the "statute" so to speak that you could throw in this person's face, And I wish you had put "non-refundable" on the receipt, But I really have never heard of a "holding deposit" being refunded after you have taken your property off the market.

Even pro-rating it and refunding a portion was big of you. I hope someone else can find something, I am more a "real estate landlord tenant" nerd. This seems an implied contract issue,( or something like that) There are some dang good lawyers (and other specialists )on this site, so maybe this will bump you up to their attention.

 

[fauve4]

Thanks

I'm convinced I'm going to loose this in court because there was no receipt for the deposit... This is a big lesson learned here for all the landlords out there that read this... Make sure NON-REFUNDABLE is clearly written on a receipt when you take the holding deposit. This is kind of a nightmare and I really appreciate your advice... if there is anyone else out there that has any other information on this I would really appreciate it! I figure I have nothing to loose at this point by going to court... either way I'd have to pay so why not at least try and fight it... it would just be nice to be somewhat prepared in court. I look forward to hearing from any lawyers out there that might know where I stand!

 

[Devedander]

I did not provide him with a receipt for the holding deposit so there is nothing in writing indicating it was non-refundable but I did indicate that it was to take the unit off the market and to turn away the other candidates.

How did you indicate this? Is it in writing somewhere? It does not have to say non refundable if it clearly states what it may be used for.

It sucks that people try to pull stuff like this, makes it all the worse for those of us honest people. I hope you get your money and he gets stuck with court fees.

 

[fauve4]

Verbal

Unfortunately it was a verbal conversation. I have since updated my application to clearly state the deposit is non-refunable, and will mark clearly and in bold type non-refundable on any receipts going forward and suggest everyone else does the same too! I only pray my judge sides on the side of landlords and I win this... this has me steamed!

 

[south]

Good luck to the renter in court he is going to need it...

NH

After accepting an applicants application, he gave me a deposit to take the unit off the market. After turning away 2 sets of other tenants and after about a week and 1/2 of back and forth on the lease, I was informed he no longer wanted the apartment and that he wanted his deposit back. I told him the deposit was non-refundable but that I would pro-rate a refund based on my actual rental loss. I showed the apartment over the weekend and found a set of new tenants to move in for the following Month (4 days early) I sent a refund check less 22 days rental loss. He is now taking me to small claims court for the full amount. I did not provide him with a receipt for the holding deposit so there is nothing in writing indicating it was non-refundable but I did indicate that it was to take the unit off the market and to turn away the other candidates. I'm wondering what my legal rights are... do I have the right to hold onto the deposit or do I have to return it? I would prefer not to have to go to court... but if I am legally entiteld to hold on to a portion of the deposit I will go in the principle of the matter. Thanks in advance for your advice. I've been told it's somewhat of a gray area but I"m wondering if anyone knows what the actual law is on this?

 

[fauve4]

Any more advice?

Any lawyers out there willing to give their perspective on this situation? Thanks!

 

[fauve4]

Talked to Lawyer

Wanted to provide an update on this -- my boyfriend spoke to a Lawyer on this and the Lawyer thought that as long as the person "knew" that the deposit was "to take the unit off the market"... that my chances were pretty good in court as in my state landlord tenant law does not apply to landlords that own under 3 rental units. So this is more of a "verbal agreement" issue than a landlord/tenant issue. Now I just have to prove that the person knew... and my boyfriend was a witness to the conversation I had with this person when I told the person in order for me to take the unit off the market and stop showing the unit to other interested parties I would first need a deposit.

I Still don't have a good feel for it and still think my chances are 50/50... but I will still give it a try in court.

 

[HomeGuru]

NH

After accepting an applicants application, he gave me a deposit to take the unit off the market. After turning away 2 sets of other tenants and after about a week and 1/2 of back and forth on the lease, I was informed he no longer wanted the apartment and that he wanted his deposit back. I told him the deposit was non-refundable but that I would pro-rate a refund based on my actual rental loss. I showed the apartment over the weekend and found a set of new tenants to move in for the following Month (4 days early) I sent a refund check less 22 days rental loss. He is now taking me to small claims court for the full amount. I did not provide him with a receipt for the holding deposit so there is nothing in writing indicating it was non-refundable but I did indicate that it was to take the unit off the market and to turn away the other candidates. I'm wondering what my legal rights are... do I have the right to hold onto the deposit or do I have to return it? I would prefer not to have to go to court... but if I am legally entiteld to hold on to a portion of the deposit I will go in the principle of the matter. Thanks in advance for your advice. I've been told it's somewhat of a gray area but I"m wondering if anyone knows what the actual law is on this?

**A: deduct your damages ie. rent loss from the deposit and refund the balance.

 

[fauve4]

I did send a prorated refund - still being brought to court

I did return a portion of the deposit, based on the rental loss - however this person is still taking me to court.

I sent a refund check less 22 days rental loss. He is now taking me to small claims court for the full amount. I did not provide him with a receipt for the holding deposit so there is nothing in writing indicating it was non-refundable but I did indicate that it was to take the unit off the market and to turn away the other candidates. I'm wondering what my legal rights are... do I have the right to hold onto the deposit or do I have to return it?

 

[ENASNI]

Fauve, do us a favor and post back on what happens? okay? It will be helpful to others here, even though each case is different, and if you have any expertise that is from experience, it could be useful to others.
Thank you.

 

[fauve4]

Will do!

I will definately let you know the outcome of the court case.... no date has been set yet. Another question... should I stop payment on the check I already sent at this point? or just leave that live until the court date?

I appreciate your support.

 

[ENASNI]

Hmm

I will definately let you know the outcome of the court case.... no date has been set yet. Another question... should I stop payment on the check I already sent at this point? or just leave that live until the court date?

I appreciate your support.

IMO no. and HomeGuru is a Real Estate lawyer, he may not have read up to your first post, he is a busy man, so him giving you the advice of something you had already done is a boon. His advice is golden. You had showed good faith and good attitude by sending the pro-rated amount. I really think this is more 70/30 towards you at this point. I do wish you luck.
Sometimes in a case like this the judge will let you have the entire amount back! It may backfire on this person who reneges.

 

[superstring]

Response from my direct experience with this

(California) I've been a landlord for almost 30 yrs & was actually taken to small claims court on this & lost. I had accepted $100 deposit along with rental application from prospective tenant,took unit off market, checked references & credit & called to tell her she was accepted. She said that she had changed her mind & didn't want the unit & wanted her check back.I said no, that it (obviously) wasn't refundable, we'd market the unit again & whenever we got a tenant in we'd refund any overlapping rent $$ to her.(Actually I had just deposited the check, & following my conversation with her, it bounced. So I called the bank & they said there was now $$ in the account & I cashed it.) She took me to small claims court where the judge was only interested in the fact that the word "non-refundable" did not appear on our application/deposit receipt! We lost & had to pay her the $100. We paid it immediately, but had a ding on our credit report for years, magnified by the fact that the court screwed up and entered it as an unpaid judgment for $1000 instead of a PAID judgment of $100 (this was when we discovered the very useful factoid that no winning plaintiff follows the rules & tells the court you've paid, so that it can wiggle its way to your credit report. You may as well take care of this yourself.)In any case it will affect your credit, even if it's paid, it stays on there for I think 7 years... I consider this to have been a very inexpensive & valuable lesson in landlord/tenant law.

 

[south]

You were just unlucky with the judge you had he was probably a pro tem, I lost a case where the tenant stopped paying rent because they said they were saving to buy a house, they left owing me two months rent plus caused over $5K in destructive damage everything from ripping of the kitchen counters to urinating all over the floors.

I presented photo's and a detailed paper trail along with an iron clad lease.

The judge awarded me zero dollars stating "This is what I call Buyer Beware you knew when you bought the building you may have problems with tenants in the business you chose so Buyer Beware I award you zero dollars".

All depends on the judge you get.

(California) I've been a landlord for almost 30 yrs & was actually taken to small claims court on this & lost. I had accepted $100 deposit along with rental application from prospective tenant,took unit off market, checked references & credit & called to tell her she was accepted. She said that she had changed her mind & didn't want the unit & wanted her check back.I said no, that it (obviously) wasn't refundable, we'd market the unit again & whenever we got a tenant in we'd refund any overlapping rent $$ to her.(Actually I had just deposited the check, & following my conversation with her, it bounced. So I called the bank & they said there was now $$ in the account & I cashed it.) She took me to small claims court where the judge was only interested in the fact that the word "non-refundable" did not appear on our application/deposit receipt! We lost & had to pay her the $100. We paid it immediately, but had a ding on our credit report for years, magnified by the fact that the court screwed up and entered it as an unpaid judgment for $1000 instead of a PAID judgment of $100 (this was when we discovered the very useful factoid that no winning plaintiff follows the rules & tells the court you've paid, so that it can wiggle its way to your credit report. You may as well take care of this yourself.)In any case it will affect your credit, even if it's paid, it stays on there for I think 7 years... I consider this to have been a very inexpensive & valuable lesson in landlord/tenant law.