Does a good faith deposit prior to lease signing constitute a verbal agreement to rent a residential property?

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Does a good faith deposit prior to lease signing constitute a verbal agreement to rent a residential property?

Considered renting a home. Made it clear to the potential landlord that we could only enter a lease agreement for 18 months if a handicapped family member felt that he could navigate the residence safely. Gave landlord a good faith deposit equal to 1 month’s rent. Days later on visit to residence handicapped determined residence unworkable. Never took possession of property pending signing of lease which was never presented. Landlord claims verbal commitment and cashed good faith deposit. Did deposit constitute verbal commitment prior to lease signing?

Asked on November 21, 2011 under Real Estate Law, New York

Answers:

Sharon Siegel / Siegel & Siegel, P.C.

Answered 10 years ago | Contributor

I am a NY lawyer.  A good faith deposit is not binding.  It is just what it says - a showing of good faith.  Depending on the amount involved, you may want to hire a lawyer to write a letter to the landlord making a demand for it back.

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SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

From what you describe, rather than accept the landlord's offer to rent the home, you made him a countercounter: that you would rent the home IF a review or inspection of the same by a handicapped relative found that the property was suitable. The landlord then evidently accepted your offer, as evidence by his accepting a deposit you made after making your offer of rental upon finding of acceptability by handicapped relative. If this summary adequately states the facts and chain of events--that first you told the landlord you would accept only if your relative approved, and then after that you offered the deposit--then the landlord should not be able to retain the deposit. He accepted a contract which had a contingency or condition in it (the relative's acceptance); that  contingency or condition was not met, entitling you to rescind the contract. Note that if you had given the landlord the deposit first, before stating the condition that you needed your relative's approval, then it could be argued that you accepted the landlord's original, unconditional offer to lease (by providing a deposit), and are bound by it.

As a practial matter, if the landlord won't return the money, you'll have to sue him to get it back; since lawsuits themselves cost money and are not certain, you may wish to consider whether there is some settlement you'd consider acceptable (e.g. the landlord keeps 1/4 or 1/3 for his trouble?) to avoid litigation.


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