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  1. #1
    Join Date
    Nov 2011
    Posts
    1

    Default Would-Be Tenants Backed Out at Last Second, Want Money Back

    My question involves landlord-tenant law in the State of: California


    I am the landlord of a property located in California, while I live in Arizona.

    I showed the property in person to my potential tenants in mid-October, move-in date was set for November 15th, free November rent and first month due on December 1st (rent of $1000/month).

    They loved the house and put down the $1000 deposit. They started emailing me during the first two weeks of November wanting to move in early, while my previous tenant was moving out. I had my Property Manager keep in contact with them about when the place would be available to them, always maintaining the Nov 15th date.

    On November 14th, the tenants showed up at the door to get the keys, and luckily the Property Manager was at the house. He let them in and they asked about the paint job. My PM said he could re-paint a couple of the rooms for them, and they agreed. He went out and bought the paint, and they agreed the move-in would be put off for one or two more days until he completed the paint-job. They were also given the option of moving in on the 15th, and he could come back at a later date to paint, or they could buy whatever paint pleased them and I would take the price of it off their December rent with a receipt.

    On November 15th, the move-in date, the tenants wrote me this email:

    LandLord,

    As per our rental agreement, the set move in date was the 15th of November. Upon inspection of the premises, moving in today is not an option. The house isn't up to code with cleanliness standards and residing conditions based on the contract. As this is an owner default in our rental agreement, I will unfortunately have to ask for my deposit back and decline rental of this property.

    I deeply apologize for any inconvenience this may cause. Thank you for your time and attention to this matter.

    If you can let me know if it is easier for you to deposit the refundable security deposit directly into my bank account: Account # xxxxxxx or to send it via post office.

    Please feel free to call me if you have any questions.

    Tenant
    I was under the impression that the initial $1000 was a holding deposit, though I did not specify that in our rental agreement. In subsequent emails, they threatened a lawyer, and I told them to go ahead and do that, that I would be happy to talk to him. I just got off the phone with him today and he said to me that my would-be tenants declared on November 15th that I broke our rental agreement under the section of Clean and Sanitary Conditions. They have no evidence, only testimony. I however, have photos of the conditions that they objected to so much, showing a perfectly clean, sanitary and functional home. He also admitted that he was confused as to why they gave me no time to "fix" what they perceived to be wrong.

    Lawyer said that my particular problem is that in the rental agreement, I list $1000 as a "security deposit" never stipulating that in the event that the tenants never move in that it turns into a holding deposit and is then nonrefundable. He said that a judge would spend 5 minutes on them, 5 minutes on me, and then refer to the rental agreement which doesn't say anything about the "holding deposit" and what would happen afterward.

    He told me my best bet would be to send back the money because whatever a judge awarded the would-be tenants would be subject to three-times damages in addition to the joy of flying out there, taking time off work etc.

    Then lawyer added that he didn't really understand the position of his clients... that they retained him for $500, that he was $275/hour, and that this should really be a business decision, about the money, and not this emotional fight standing-on-the-principal-of-the-matter stand that his client seems to have taken. He said he was truly befuddled but that if it came to court, he would not be involved in the actual small claims appearance (since he can't) but that he would be filing an appeal should it not go their way.

    My Questions:

    Does my rental agreement negate my Holding Deposit stance?

    If not, am I better off sending an accounting of that deposit saying something like, Holding Deposit - would-be tenants never took possession?

    Is there anything else I should do, or are they really just blowing smoke since they don't know where I live in Arizona and they'd be hard-pressed to serve me with any small claims paperwork?


    Thank you for your time!
    Gryndor

  2. #2
    Join Date
    Jul 2009
    Location
    Cinnaminson, New Jersey, United States
    Posts
    205

    Default Re: Would-Be Tenants Backed Out at Last Second, Want Money Back

    Obviously, they can sue you as much as they want to, but with only testimony and your photos and living out of state, they are going to be hard pressed to follow through with this.

  3. #3
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Would-Be Tenants Backed Out at Last Second, Want Money Back

    The lawyer has indicated to you that the tenants feel justified in walking away from the lease on the basis of a "Clean and Sanitary Conditions" provision and the premises not being fit for delivery on the agreed move-in date. You state that have no contract that would allow you to keep their deposit as anything but a payment toward their obligations under the lease, and if you have no basis for enforcing the lease (the tenant's position) you owe them the money. Your defense would presumably be that the rejection of the premises was unreasonable and that they owe some amount of rent to cover the period when you were searching for a replacement tenant, but you would have to present your case in court.

    As we're talking about premises in California, the tenants can sue you in California. As the lawyer has told you, they are willing to pay his fee to get a judgment against you, even though that will cost more than the deposit, and he's happy to take their money. If he sues and proves a willful violation of the deposit law, he could potentially get a judgment for three times the wrongfully withheld amount. And yes, there is a burden in appearing and defending against a lawsuit, particularly when you live in another state.

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