How are early terminations of leases handled?

A friend and I were to begin renting an apartment 2 months ago;  the lease was signed about 7 months ago. In full compliance we put down a $500 security deposit at the time of signing. In the lease it states that the tenant may terminate the lease early after moving in and be charged for 3 months of rent as a penalty. Due to circumstances, we canceled the lease 2 weeks after signing, more than 90 days notice, never having moved in. We were not charged for the 3 months of rent but were also informed that we would not be refunded the $500. Are we entitled to have our $500 security deposit returned to us?

Asked on November 10, 2011 under Real Estate Law, Pennsylvania


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Under the lease and the circumstances as you describe, the landlord could have charged you 3 months rent. When tenants leave owing rent, the landlord may take that rent out of the security deposit--that's one of the purposes of the security deposit. The landlord would be entitled to apply the deposit to the 3 months you would owe him, so he does  not need to return the deposit--and that's probably what he did: he kept the deposit, but figured that either to be practical (you might not have other money for him to recover) or to be  nice guy, or just to save himself time, expense, and headache, he wouldn't try to recover anything from you beyond the deposit.

Note that not having moved in doesn't matter--once you sign the lease, you are obligated.

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