Can a landlord keep a deposit if we never moved into the house or signed a contract?

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Can a landlord keep a deposit if we never moved into the house or signed a contract?

2 couples, myself included, where going to move into a house. We found one and the landlords asked that if we paid a $1200 deposit it would be ours until remodeling was completed the 1st this month. So we paid the amount but when the1st came the house was not finished. We cameto find out one of the couples couldn’t afford the house and pulled out. Now we backed out fully. The landlord is claiming that they are going to keep the deposit because they turned down 5 other possible renter while waiting. Can they do this or do they have to give us our deposit back?

Asked on November 6, 2011 under Real Estate Law, Tennessee

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

From what you write, if the house being remodeled and completed by the first was either a condition of your rental (i.e. it was part of the lease, that the premises would be ready on that day) or was one of the representations (promises) made to induce you to rent, then the failure to have the home ready on that day would probably give you grounds to get your deposit back.

Note that the other couple pulling out does not matter, and nor does it matter that you couldn't afford the home on your own--only some act of the landlord, violating a key term of the lease or some important represenation made to induce you to rent, would allow you to terminate the lease.

A key factor will be 1) how not ready was the home; and (2) when would it be fully ready. If it was almost remodeled, and/or would have been complete shortly, then you probably would not be entitled to terminate the lease and get your deposit back, though you might be entitled to some compensation for the failure to have it fully ready.

To try to get the deposit back, you will need to sue the landlord and prove in court that the home being ready on the first was a key part of the lease or a critical part of your deciding to rent it, and status of the home on the 1st was such that the landlord had breached the lease or its representations in a material (or important) way.


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