Is rental security deposit refundable if I never moved into the property and never signed a lease?

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Is rental security deposit refundable if I never moved into the property and never signed a lease?

After viewing the property we filled out a credit check application and were asked to give a deposit in order to hold the house. After our application was approved next day, we went to the office to sign a lease but once there  we didn’t agree with a few conditions listed on the lease.After the landlord refused to make any changes to the lease, we asked for a refund of our deposit; this was refused. The landlord then showed us a signed credit check application where in small letter it reads that in case we fail to complete the transaction our deposit will be forfeited. What’s our chance of winning this in court?

Asked on September 24, 2011 under Real Estate Law, Illinois

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Your chance of winning, unfortunately, is small:

1) People are "charged" with--or responsible for reading--everything they sign before signing it. If you signed a credit application saying that the deposit is not refundable, that term will most likely be enforced.

2) The deposit you describe is not a "security deposit," which is collateral a renter provides against damage to the premises or nonpayment of rent. Instead, as you write, it was a "deposit in order to hold the house." Those kinds of deposits would be refundable if the landlord tried to cancel the transaction, but not when the prospective renter does--after all, the whole purpose is to penalize the renter for pulling out, as a way to encourage  him to not do so (and to therefore encourage the landlord to hold the apartment, since the landlord can be sure of at least getting the amount of the deposit).


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