Landlord May Keep Deposit, Regardless Of Potential Renter's Decision

Added January 19, 2009 by Ilyce R. Glink

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Summary: If you give money to a landlord to hold a rental house for you, you risk losing that money, especially if you didn't sign any documentation. The landlord is under no obligation to return the deposit put down on the house, even if there was a verbal agreement that the money was only to hold the house. To get the money back you may need to contact a real estate attorney.

Q: My daughter is a single mom with 5 kids. She has been looking for a house to rent. She was desperate because she has to be out of her house by the first of the month.

She checked around but was only able to find one house which she didn't really like because it was a 3 bedroom with two baths, but both of the bathrooms were in the master bedroom. Also, the rooms have no closets.

Even so, she gave the owner a money order for $600 to hold it for a few days. Later that night, the owner of a house she was interested in before she saw this one called her. Previously this owner told her she wasn't renting but now he tells her she will rent to her.

It's a 4-bedroom, 2-bath which is what she needs for her children. The first owner will not give her the money back. There were no legal papers signed. Is it legal for him to do this?

A: Desperate or not, your daughter was foolish to hand over money without signing anything. A court could determine that the $600 was simply a fee to "hold" the property for her, so he wouldn't rent it to anyone else. Or, it could be her security deposit toward the rental for her new place.

She will need to either go to a real estate attorney who can write a letter to attempt to collect, or let the landlord know that she will sue him in small claims court for the money plus fees if he doesn't give it back. He may agree to return all of it (if he's a gem of a guy who feels bad for your daughter), some portion of it, or none of it.

I don't know where you live, but there may be other landlord/tenant rules with built-in protections for your daughter in your area. She should check with the local municipality and figure out her rights and the prospective landlord's responsibilities. If your local municipality does have some rules, those rules might require the landlord to return the money to her.

Jan. 19, 2009.

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