Breaking an Oral Rental Agreement prior to Occupancy --- Small Claims Court + Credit Score ?'s (apartment, tenant)

[I-Jub]

I have a few questions about breaking an Oral Rental Agreement prior to occupancy, mainly about what to expect in Small Claims Court (basically how everything works) and potential ramifications to my credit score. Although, any advice is appreciated.

Here's the story:

I graduated from college at the end of August and was happy to be offered a job a few weeks ago at a Fortune 500 corporation. However, the company is located 85 miles from my parents' house. I figured the costs of renting a room would be less than costs of commuting (gas+time) such a distance daily.

I found a room for rent on CraigsList in an owner-occupied house. I drove down to meet with the landlord on a Tuesday evening (2 weeks ago). At that meeting I expressed interest in renting the room (competitive rent, good location, completely furnished, & private bathroom). The landlord offered the room to me. I told her I needed several days to iron out the details of my job offer with the company before entering into a binding rental agreement with her. She said that was fine and that I could take as much time as I needed and move in whenever I wanted (vague, I know). I did not verbally agree to rent the room or sign a rental agreement or lease. The landlord said I could write up a rental agreement if I wanted to and she would sign it before I moved in. I did agree to give her a security deposit check (equal to 1 month's rent) with the stipulation that she agreed not cash it until I called her on the phone to officially enter into a rental agreement. Which I would do after speaking with the company and going through the process of accepting the job offer. She also made a copy of my driver's license when I wrote the security deposit check.

That Friday (3 days later), I was offered a higher-paying job within 10 miles of my parents' house. Of course, it was a no-brainer to accept this new job offer and decline the previous out-of-town offer (and decline room rental offer). The next day (Saturday), I contacted the landlord via phone and informed her of my decision. Her response was that she had already deposited my security deposit check into her bank account (I never authorized her to cash the check), and that she would refund ½ of the security deposit to me. I stated to her that arbitrarily taking ½ of my security deposit was not acceptable nor fair because we never entered into a binding rental agreement and I had not occupied the room. However, the landlord was unreceptive to my opinion. So I contacted my bank and asked them to "Stop Payment" on the security deposit check. My bank successfully performed the Stop Payment and the money never left my account.

Several days later, I received an email from the landlord stating that although she agreed that we did not have a written lease, I had broken a promise/contract (I made no promises nor entered into a binding contract). She requested that I pay her ½ of the security deposit plus a $20 bank fee (from the Stop Payment) and additional fees if any checks she has written bounce due to my Stop Payment. She also stated that if I do not pay immediately, she will use contacts that she has at the large corporation (the one that offered me a job, which I declined) to gain access to the human resources department. I do not ever plan on applying to that company again, so I am not worried about the landlord’s actions burning a bridge for me there. However, I do not want her to affect my credit score. If she gets her hands on my SSN, will the credit reporting agencies allow her issue a blemish on my credit report?

Also, I want to be prepared in case the landlord takes me to Small Claims Court. What should I expect in Small Claims Court? How does the process work from start to finish? What type of decision/verdict/settlement should I expect given the circumstance I have outlined? Would I need a lawyer in this type of case? Who pays the court fees? The loser, the winner, or both? Would my transportation costs ($85 for the 170-mile round trip - IRS standard mileage rate for 2008 in 50.5 cents per business mile driven) be reimbursed by the landlord if I win the case against her?

Even though, I did not authorize her to cash my security deposit check (especially not into her personal account). I am willing to pay her $20 for the bank fee she incurred. However, I want to get advice before sending that payment. If I have to appear in Small Claims Court at my own expense ($85 transportation costs), then I’d rather set aside $20 towards that expense.

Again, any advice on this situation is appreciated.

Thanks.

[zman0]

There's a lot on your side...but is it really worth the hassle over 1/2 months rent? Send her a letter with a check for the 1/2 months rent, that it's satisfaction in full of all debts owed, if she tries to place a notice on your credit report it will be in violation of the Fair Credit Reporting Act, and if she damages your reputation you will consider it defamation.

I've bolded the key words that you need to include.

[I-Jub]

Thanks for the advice, especially the part about the Fair Credit Reporting Act.

However, I simply can't justify forking over ½ month's rent to this landlord when I never entered into a rental agreement, occupied the residence, or prevented her from renting to other prospective tenants. I also do not want to suggest the ideas of credit reporting or small claims court to her since she has not mentioned them yet.

It's an issue of principle for me. If I have to spend that amount of money, I'd rather put in the time and energy of dealing with the situation through the legal system.


I plan on sending a letter to the landlord reminding her that (1) I never entered into a rental agreement or binding contract with her, and (2) I did not authorize her to deposit my security deposit check until a rental agreement was executed.

Furthermore, I intend to refer her to Title 25 § 5514 of Delaware Code, which states:

Each security deposit shall be placed by the landlord in an escrow bank account in a federally-insured banking institution with an office that accepts deposits within the State. Such account shall be designated as a security deposits account and shall not be used in the operation of any business by the landlord. The landlord shall disclose to the tenant the location of the security deposit account. The security deposit principal shall be held and administered for the benefit of the tenant, and the tenant's claim to such money shall be prior to that of any creditor of the landlord, including, but not limited to, a trustee in bankruptcy, even if such money is commingled.

Failure by a landlord to disclose the location of the security deposit account within 20 days of a written request by a tenant or failure by the landlord to deposit the security deposit in a federally-insured financial institution with an office that accepts deposits within the State, shall constitute forfeiture of the security deposit by the landlord to the tenant.

CHAPTER 55. TENANT OBLIGATIONS AND LANDLORD REMEDIES

The landlord's email states: "Your 'stop payment' could have been announced in order to avoid me writing checks counting on those funds. If I have bounced checks as a result of what you did, you are not only messing up my account but creating huge inconveniences and causing harm to me."

Thus proving she violated state law by attempting to deposit my security deposit check into a non-escrow account (her personal account), which "constitutes forfeiture of the security deposit by the landlord to the tenant." <- even if I had actually entered into a rental agreement


In my letter to the landlord, I will state that I am willing to reimburse her for the $20 bank fee.


Anybody have any advice?
What to expect in small claims court? How does it work?


Thanks.

[texdav]

Sounds to me liike you shuld paythe half month.If you do thios remember when a landlord in the future uses the tecxhnocal terms to get money out of you. Personally;'I would paythe half months rent out of principal.

[aaauger]

Look at it from the landlord's business perspective. She took the property off the market for you. Since you decided not to enter into a lease, her property may be vacant (not producing income) while she looks for a new renter. The security deposit served two purposes: 1) it secured the property for you and 2) it secured the landlord against lost rental income. She has legal grounds to hold the entire security deposit and is being reasonable by only requesting a half month's rent.

BTW Instead of charging you for a stop-payment fee, she should let the check clear and refund you.

[I-Jub]

Thanks for the advice. Before coming to the conclusion that I should fork over the money to the landlord's arbitrary demands, did you read my first post?

In that post, I outlined that when the landlord offered the room to me, I did not accept, instead I told her I needed several days to officially set up employment in the local area. At this time, I made it very clear to the landlord that (1) I was not accepting her offer on-the-spot and/or entering into a binding contract, and (2) she was free to offer the room to other prospective tenants.

Originally Posted by aaauger

Look at it from the landlord's business perspective. She took the property off the market for you. Since you decided not to enter into a lease, her property may be vacant (not producing income) while she looks for a new renter. The security deposit served two purposes: 1) it secured the property for you and 2) it secured the landlord against lost rental income. She has legal grounds to hold the entire security deposit and is being reasonable by only requesting a half month's rent.

As I stated before, I gave the landlord a security deposit check with the stipulation that she agreed not to deposit it until I called her on the phone to accept her offer. The purpose being that if I called to accept her offer (I would be 85 miles away), she would have the security deposit check in her possession, which would THEN allow her to take the room offer the market and secure the room for me.


So I'm not sure how it could be argued that I should pay her out of principal? I think the argument for paying her (the full amount she arbitrarily demands) is to make her go away.

[Woof Woof Woof!]

No. Do not send her the money.

I would not send her the money because you never signed a lease. You did not ask her to hold the apartment. And seriously, you only called her three days later. Big deal.

Also, she should not be writing checks against a security deposit. Usually, in most states, it goes into a separate interest earning account.

Sounds like she is making a lot of silly empty threats. She thinks she can get away with it because you are a college kid. Don't let her try and intimidate you.

Good luck.

[serate]

Either pay her 1/2 months rent or pay her nothing. If you pay her the $20 then you are agreeing that YOU did something wrong. You didn't.

[STT Resident]

Originally Posted by zman0

There's a lot on your side...but is it really worth the hassle over 1/2 months rent? Send her a letter with a check for the 1/2 months rent, that it's satisfaction in full of all debts owed, if she tries to place a notice on your credit report it will be in violation of the Fair Credit Reporting Act, and if she damages your reputation you will consider it defamation.

I've bolded the key words that you need to include.

My sentiments exactly. Get on with your life, enjoy your new job and simply learn a lesson for the future. Cheers!

[Woof Woof Woof!]

Boy, I do not agree with the advice given here.

She is not your landlord. She cannot place a notice on your credit report. You gave her a check, which you told her to hold. Three days later you canceled it.

Why would you owe her for 1/2 a months rent if she only had the apt off market for three days?

You told her that you were not sure and were waiting for a confirmation on the job offer. That's a verbal agreement. Nothing was in writing.

She's full of hot hair and empty threats.

Keep your money !!!