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  1. #1
    Join Date
    Oct 2015

    Question Tenant Decided Not to Enter a Lease, and Landlord Won't Return the Security Deposit

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

    My husband and I have been hunting for a rental house for a few weeks. I found one I really liked, but other people inquired first and I was told I might hear back if the others fell through. Houses move quickly in my area, so when I found a second house that fit most of my criteria, I filled out an application and paid the application fee. At this time, it is October 21.

    October 22: Upon application approval for the second house, the landlord tried to get me to sign a lease ASAP, but I was hesitant because I was waiting to hear back about the first house. Also because my current lease at my apartment isn't up until 11/15, but he wanted me to move in 11/1, so I'd have to pay double rent for 2 weeks and I'd be REALLY scraping by for a month. The landlord told me if I paid the first half of the security deposit ($700 out of $1375), he would let me have first pick of the house and stop showing it, but he also said there were other qualified, interested applicants. It was 100% construed as a security deposit in all verbal and written communication. I did not sign the lease.

    October 23: I went ahead and paid the $700 security deposit, just in case the other house didn't come through. I figured paying double rent for 2 weeks was worth it if I secured a house that worked. He gave me a receipt, which he signed and dated, that stated the $700 "security deposit" was received.

    October 28: The first house I wanted contacted me saying I could have the house if I wanted it, so I said yes. I notified the landlord of the second house immediately. He responded immediately and is claiming that since he took the house off the market, he lost out on 5 days of advertisement. He said that if he doesn't get a tenant to move in by the 1st, rent costs about $45 per day, and he'd use the $700 to pay those costs until a tenant is secured. Interestingly, in his response email, he twisted the wording of the $700 security deposit to just "deposit" in the first paragraph, then to "holding deposit" at the end. That's the first time he ever regarded it as such. I thought my withdrawal of interest wouldn't be an issue since he said there were other interested people in line.

    I looked up the Texas Property code, and the costs and damages he's claiming (in Sec. 92.1031 (b)(2)) only apply to tenants who signed a lease and breached it. Since there is no lease signed, he cannot keep my security deposit which secures the lease. I'm 100% entitled to my deposit, right? I sent him an email including Sec. 92.1031 of the Texas Property code with "according to a lease between the landlord and the tenant" bolded, Section 92.104 (a), and the definitions of security deposit and tenant. I also included a forwarding address to return my money within 30 days of my withdrawal of interest, but he has yet to reply...

    My questions at this point are:

    1. Should I send a formal demand letter threatening to file suit?
    2. Is he considered a landlord who is acting in bad faith if I'm not a tenant/a lease was never signed? (In other words, could I get the $100 plus 3x the amount wrongfully withheld plus court costs, as stated in Sec. 92.354, if I took him to small claims court?)
    3. Isn't $700 a bit MUCH for a simple holding deposit, which is what he is now trying to claim it was?

    I'd appreciate any advice on how to proceed.


  2. #2
    Join Date
    Sep 2005
    Behind a Desk

    Default Re: Tenant Decided Not to Enter a Lease, and Landlord Won't Return the Security Depos

    If the landlord chose to call the deposit a "security deposit" on the lease, not an "application fee", "holding deposit", or anything similar, then it's a security deposit and must be treated as such. As there was an understanding that you had not yet entered into a lease, but would likely do so at a later date, your landlord has not positioned himself to claim that there was an oral lease.
    Quote Quoting Texas Property Code, Sec. 92.102. Security Deposit.
    A security deposit is any advance of money, other than a rental application deposit or an advance payment of rent, that is intended primarily to secure performance under a lease of a dwelling that has been entered into by a landlord and a tenant.
    Quote Quoting Texas Property Code, Sec. 92.103. Obligation to Refund.
    (a) Except as provided by Section 92.107, the landlord shall refund a security deposit to the tenant on or before the 30th day after the date the tenant surrenders the premises.

    (b) A requirement that a tenant give advance notice of surrender as a condition for refunding the security deposit is effective only if the requirement is underlined or is printed in conspicuous bold print in the lease.

    (c) The tenant's claim to the security deposit takes priority over the claim of any creditor of the landlord, including a trustee in bankruptcy.
    I have no way of telling you if the landlord will be more receptive to your "formal letter" than to your oral requests. If you think a letter might inspire him to return the money, all it costs you is some paper, and envelope and a stamp.

    You can try to convince a court that he is acting in bad faith and to apply a multiplier to the damages; I am not going to try to guess what a court is going to decide under the facts that are presented at trial. You should anticipate that your recovery will be limited to the actual amount of the deposit, and treat anything more as a happy surprise.

    But maybe you'll be lucky, he'll find a tenant, and all of this will be moot.

    No, $700 is not a great deal of money for a holding deposit on a unit with a $1,400 rental rate. But from what you've told us, it's not a holding deposit.

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