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I've read the landlord/tenant law for my state and it's a bit tough to follow at parts and I think I know the answer but I want to get some input.
On May 20th, 2015 I visited an apartment and decided I liked the place. I applied and paid the application fee. Was approved on the spot. The unit was not available to move into until June 20th, 2015. So they told me to put down a $200 deposit to "hold the apartment".
They told me these were the next steps:
-Fill out / sign the lease online before I move in on June 20th
-Bring in the move in money on June 20th to get keys (as long as the lease is signed by this time)
They sent me the lease via DocuSign around June 1st and again said, please fill this out and sign before you show up on June 20th to get the keys.
Fast forward to June 10th, 2015. I found a much better deal and much better place. So I called the landlord and said, I won't be filling out the lease and moving in after all. I said that I understand my "deposit to hold" the apartment of $200 would be forfeited. He directed me to a form I signed on the day I put the deposit down. The form was stating how the $200 will be used to hold the apartment and that by signing I agree to sign the lease. Now he is saying since I signed this and agreed to sign the lease before moving in that I'm somehow tied to the lease? Will me signing a form, agreeing to sign a lease, tie to me to a lease?
Does the form not say what the penalty is if you fail to enter into a lease?
In my opinion, a holding deposit is the only thing at risk if you haven't entered into a lease. But it would depend on both the exact wording of the form you signed, AS WELL AS state law and local case history.
But my state is pretty landlord friendly, and I still don't think that would fly here. If you haven't signed a lease, you aren't obligated to a lease.
Worst case scenario, they MIGHT POSSIBLY be able to charge you if there is any downtime before they find a replacement tenant. But even that, I would fight against.
In CA, first of all there can be no non-refundable fees. Second, landlords in CA are required to mitigate damages. So, they can only charge you for rent lost due to your breaking a lease plus any advertising costs.
If you didn't even sign a lease, the most they can charge you for, is any out of pocket damages, due to your changing your mind about renting the place. They are not allowed to simply keep your money, without proving that you cost them that amount of money out of pocket.
Odds are, they can't.
So, I'd send them a letter like this:
Dear Landlord,
In CA landlords are not allowed to charge non-refundable fees. Landlords are also required to mitigate damages. You would have to prove to a court of law that you had actual out-of-pocket damages in the amount of my deposit. As my lease was not to begin until June 20th, and I told you I was not going to move in on June 10th, you would not have known at that time that your actual out-of-pocket damages would amount to the $200 deposit I gave you at that time, although that is what you told me.
Please be aware that if a court finds your withholding of my deposit money was done in bad faith, you will likely also be liable for punitive damages. I would also be asking for my court costs.
Therefore, I am formally asking you to return my deposit in the amount of $200 to be returned to me within 7 days, or I will be filing a small claims court action asking for my full deposit, punitive damages and my court costs.
Thanks for the advice so far. The paper I signed says nothing about what happens if I don't enter into a lease. It says signer agrees to enter into a lease for unit X at address X. That's the line below a line that says signer agrees to the holding deposit listed above to hold unit X at address X until date X.
So far, I've lost my $200 (they deposited the check) but the person from their office says they will "be in touch" regarding the other fees that I owe based on breaking the lease (that I never signed).
Ok, I forgot about that weird, messed up rule in California. If I were a landlord in California, I'd imagine I'd have to get around it by charging a $500 application fee, which was refundable when the lease was signed, or some other ridiculous arrangement. Stupid law. Holding deposits SHOULD be nonrefundable if the tenant changes their mind. Or else don't have them at all. The property is still available until a lease is signed.
Considering that law, send the letter as NoMoreSnow said. But be aware that if they are unable to find a new tenant for the same rent to start the same date, you could end up owing more than the original $200. That being so, rather than demanding the $200 back, I'd probably try to see if I could get them to accept the $200 as paid in full.
Ok, I forgot about that weird, messed up rule in California. If I were a landlord in California, I'd imagine I'd have to get around it by charging a $500 application fee, which was refundable when the lease was signed, or some other ridiculous arrangement. Stupid law. Holding deposits SHOULD be nonrefundable if the tenant changes their mind. Or else don't have them at all. The property is still available until a lease is signed.
Considering that law, send the letter as NoMoreSnow said. But be aware that if they are unable to find a new tenant for the same rent to start the same date, you could end up owing more than the original $200. That being so, rather than demanding the $200 back, I'd probably try to see if I could get them to accept the $200 as paid in full.
So you think me signing a holding deposit slip agreeing to enter into a lease = signing a lease?
But as I said in the prior post, whether it means you have some liability does depend on the exact wording of the form you signed, the state law, and case history for your county. I don't know how California in general and your county specifically has handled holding deposits when a dispute gets to the courtroom, so I can't say who would win that battle.
Ok, I forgot about that weird, messed up rule in California. If I were a landlord in California, I'd imagine I'd have to get around it by charging a $500 application fee, which was refundable when the lease was signed, or some other ridiculous arrangement. Stupid law. Holding deposits SHOULD be nonrefundable if the tenant changes their mind. Or else don't have them at all. The property is still available until a lease is signed.
Considering that law, send the letter as NoMoreSnow said. But be aware that if they are unable to find a new tenant for the same rent to start the same date, you could end up owing more than the original $200. That being so, rather than demanding the $200 back, I'd probably try to see if I could get them to accept the $200 as paid in full.
In CA, application fees are also mandated by law to be no more than $42 or so - the amount is changed every now by a few cents. But, right around $42.
And the law made any "fees" to be considered part of the security deposit (other than the application fee) so that landlords can't get around the non-refundable "deposit" law.
And any fees collected, including the $42 application fee maximum, must still be proven to be an actual out-of-pocket expense.
In CA landlords have to prove actual out-of-pocket losses. This landlord would have to prove it cost them $200 to take the unit off the market during that time frame.
Quote:
Originally Posted by Mr_Geek
So you think me signing a holding deposit slip agreeing to enter into a lease = signing a lease?
Absolutely not. All you have is an option, basically. You paid for the option to rent that unit. But, even then, they need to mitigate damages by trying to rent it to someone else. In my opinion.
Yeah, remind me never to be a landlord there. Who would ever want to be a landlord in a state that is so restrictive? If the property manager is not allowed to make any profit at all, that means they have to charge the property owners higher rates just to stay in business, meaning the rents are higher to cover those expenses. We charge property owners 5-6%. I always wondered how some companies justified charging 10%. Now I know. It is the only way they can stay in business. Leads to higher rents for everyone, instead of just penalties for those who don't behave, or don't fulfill the lease.
No wonder so many investors who live there buy properties elsewhere. I'm surprised people can find rental housing there. And now I understand more about why there are so many slumlord stories there.
What I'm hearing is that everything about California rental law is penny wise, pound foolish. It keeps the penalties and fees down, but in the long run, that raises the rental rates, costing everyone more money.
But as I said before, if they don't have it rented by now, it is entirely possible that the "actual losses" will be more than $200. Say the rent is $1500. That is $50 per day. The OP was supposed to move in this Saturday. So if it isn't occupied by Wednesday, that is $200 in just rent, not counting utilities, advertising costs, fuel for additional showings, etc.
I don't know if California law would allow those things to be charged, but if "actual losses" are allowed, they add up pretty fast.
CA is tricky, if I were you I would get everything together and call a lawyer who has a free consultation and go talk to them. In AZ if you fail to sign I keep your holding deposit and move on, it is considered my damages. Though I also refuse to hold a unit for any reason because of situations like this.
If you don't want to seek real legal advice then NoMoreSnowForMe seems to be giving really good advice.
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