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  1. #1

    Default Refund Of Holding Deposit Before Lease Signed?

    My question involves a security deposit in the State of: CA

    So I guess here's the story. Three friends and I have been apartment/house hunting lately in a college town where the demand for housing is high. At an open house, we saw what we liked and because there were several other groups that seemed enthusiastic about the place, we provided the LL with a holding deposit and an application form. No lease was signed, no form regarding the holding deposit, the only signature provided was on the app and the check -- we weren't even sure they would give us the place.

    It's been about a week and a half since then, we've been hashing the details out with the LL via email, and he just gave us a copy of the lease (via email). There are several provisions in it that we weren't expecting (regarding usage of certain rooms in the house, how utility bills will be split, etc.) and to be honest, at this point we simply have a bad taste in our mouth with regards to the whole situation.

    We informed him over the phone that we are no longer interested, and he immediately responded (via email) that either we can leave him the entire holding deposit as penalty, or else he will attempt to enforce the lease (which we never signed).

    The house is still occupied (and will be until June 1, when the current tenants must move out), and it's highly unlikely he would have trouble finding someone else to rent it to before then -- thus his chance of losing money on rent is very low. I could understand if he wanted to withhold part of the holding deposit to cover his costs of drawing up the lease, time spent emailing us, etc., but can he really demand to keep the whole thing?

  2. #2
    panther10758 Guest

    Default Re: Refund Of Holding Deposit Before Lease Signed?

    You can find your answer here

  3. #3

    Default Re: Refund Of Holding Deposit Before Lease Signed?

    Thanks for the quick reply, Panther. I've looked through that resource before, but it wasn't exactly clear to me what the law says. For example, part of that resource says "As a general rule, if you change your mind, the landlord can keep some—and perhaps all —of your holding deposit. The amount that the landlord can keep depends on the costs that the landlord has incurred because you
    changed your mind—for example, additional advertising costs and lost rent."

    So does this mean he can only keep the part of the deposit that would go toward his costs for us changing our minds? The deposit was equal in amount to the first month's rent -- a non-negligible sum for a four bedroom house. And as for application processing, advertisement, etc., there was no application fee associated with applying (we asked, and were told verbally); and the LL has (to the best of our knowledge) not paid any money in advertising (we found out about the place via Craigslist). Of course, we would completely expect the LL to keep a reasonable portion of the deposit for his time, etc., but not the >$4000 value of the deposit.

    That said, he emailed us when he offered the place saying he would deposit the check and that it would be non-refundable. This was a week before he actually showed us a copy of the lease, so we had nothing to object to at the time. Can he make the entire $4000 deposit nonrefundable?

  4. #4
    Join Date
    Jul 2006
    Posts
    2,652

    Default Re: Refund Of Holding Deposit Before Lease Signed?

    He can't enforce a lease that was never signed. I suppose that is why he used the words, "will attempt" to enforce the lease.

    While it does make sense that he is entitled to some of the holding deposit (maybe even all of it), your remedy would be to file a claim against him in small claims court and let the judge decide.

    How much money are you talking about here?

  5. #5

    Default Re: Refund Of Holding Deposit Before Lease Signed?

    Hey Happy Trails,

    I agree that he should be entitled to some of it. The total amount of the deposit was $4100.

    Edit: And actually, the "attempt to" enforce the lease were my words -- he said "we shall proceed to enforce the rental agreement in its entirety" and has claimed that the emails he sent us (and we sent back with additional applications, info, etc.) constitute a written contract.

    My lesson learned: don't give out checks so lightly, and get everything in writing. :-(

  6. #6
    Join Date
    Jul 2006
    Posts
    2,652

    Default Re: Refund Of Holding Deposit Before Lease Signed?

    You can sue, as I mentioned earlier.

    When you gave him the check as a "holding deposit" did anyone mention if any part of it was refundable at that time, if you were to change your mind?

  7. #7

    Default Re: Refund Of Holding Deposit Before Lease Signed?

    It sounds like sueing may be our only option.

    When we gave him the check, there was no mention of whether or not it was refundable, one way or another.

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