What to do about a non-reundable deposit that I was not informed about?

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What to do about a non-reundable deposit that I was not informed about?

We were shopping for a vehicle and the dealer had us deposit $500 so that he can put it on hold and don’t show it to other peopel while we discuss if we would buy the vehicle. When we later decided not to, they said we can’t get our deposit back because of a 100% non-refundable clause in a paper that was never explained to us. they told us to sign it becuase it was for a pre-approval and he never mentioned the “all deposits are non-refundable” clause. Is what the dealer doing legal?

Asked on October 27, 2012 under General Practice, New York

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Under the laws of all states in this country there is no such thing as a nin-refundable deposit unless the deposit is classified and defined as an option to purchase an item where the seller holds the item from the public over a period of time. However, such a description of any deposit must specifically state that such is an "option to pay" as to the money given to the seller.

I suggest that you consult with a consumer law attorney in that the hold back of the money you placed for the vehicle may very well be illegal.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

What the dealer is doing is most likely legal:

1) If the clause was in paper you signed, you don't need to have it explained to you--the law presumes that people read, understand, and agree to what they sign, and will hold you to it.

2) Even without the above, deposits to hold a vehicle or other product are generally nonrefundable in the event that the buyer chooses to no go through with the sale. The agreement is that in exchange for the money, the dealer will make the car available  to you and hold it for your purchase against other potential customers; you breached the agreement by not going through with the purchase, which lets the dealer keep the money.


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