Hi, my fiancé and I just decided to rent from a couple, signed everything but the lease agreement because we had not done a walkthrough and he told us we did not need to until we did that, and we put a $1,000 cash deposit down and they said the property was ours and were going to introduce us to the neighbors and the whole nine yards. Then this morning, I received a call from the wife and they decided to void our agreement and rent to someone who offered them more money. They said by law that since we hadn't signed all the paperwork that they could do this, even though we had given them $1,000 and had a verbal agreement, which apparently wasn't good enough. Obviously, this was beyond unethical of them at least, but I'm curious about the legality of accepting a monetary deposit in the state of Texas , and then breaking the agreement? Any insite into this matter would be greatly appreciated. Thanks in advance!

I can't answer it specifically about the state of Texas but I think usually taking a deposit does not commit the landlord to anything that isn't in writing. In fact I always take the deposit before even screening a tenant and then give it back if I don't want to take the tenant.

That is not to say that it's right to take a deposit and verbally promise the property, I would never do that. I have the prospective tenant sign a statement explaining exactly what the process is and I stick to it.

So, next time, don't plan on getting the property until you've signed a lease even if you give a deposit and the landlord promises the world.

Hello R:

I believe you had a binding contract. If this breech cost you money, I'd sue them in small claims court for it.

You say you signed "everything". The only thing to sign is a lease, so I don't know what you signed. You don't need to sign the receipt - HE does.

excon

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Originally Posted by RyanATX

Hi, my fiance and I just decided to rent from a couple, signed everything but the lease agreement because we had not done a walkthrough and he told us we did not need to until we did that, and we put a $1,000 cash deposit down and they said the property was ours and were going to introduce us to the neighbors and the whole nine yards. Then this morning, I received a call from the wife and they decided to void our agreement and rent to someone who offered them more money. They said by law that since we hadn't signed all the paperwork that they could do this, eventhough we had given them $1,000 and had a verbal agreement, which apparently wasn't good enough. Obviously, this was beyond unethical of them at least, but I'm curious about the legality of accepting a monetary deposit in the state of Texas , and then breaking the agreement? Any insite into this matter would be greatly appreciated. Thanks in advance!

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I see two arguments to this -

They took the deposit which, in theory, should "bind" the deal.

HOWEVER - there can be no deal, no contract, if there is no meeting of the minds, no understanding, without that written lease/contract - which apparently you were aware was necessary. If you would not sign a lease until you did the walk through you did not have a contract to lease the apartment - you had a "if we walk through and we like it" agreement, which is not the same thing.

I've asked that this be moved to the legal board - similar question last month AND there's an expert on Texas Law over there.

"Rocking, can you hear me?"

You probably could bind them to verbal agreement, but do you really want to? This would not create a amicable landlord tenant relationship and they could decide not to renew.

On the other hand, you could sue them for any costs you incurred by relying on their verbal agreement.

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Originally Posted by RyanATX

Hi, my fiance and I just decided to rent from a couple, signed everything but the lease agreement because we had not done a walkthrough and he told us we did not need to until we did that, and we put a $1,000 cash deposit down and they said the property was ours and were going to introduce us to the neighbors and the whole nine yards. Then this morning, I received a call from the wife and they decided to void our agreement and rent to someone who offered them more money. They said by law that since we hadn't signed all the paperwork that they could do this, eventhough we had given them $1,000 and had a verbal agreement, which apparently wasn't good enough. Obviously, this was beyond unethical of them at least, but I'm curious about the legality of accepting a monetary deposit in the state of Texas , and then breaking the agreement? Any insite into this matter would be greatly appreciated. Thanks in advance!

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Thanks for the answers, I guess I need to talk to someone who knows Texas law, since landlord-tenant agreements are different state to state. I think what bothered me the most about this is that he told us we would sign after we did the walk through in a couple days, we could have signed at the moment had we known they would pull this, but I thought a receipt for payment of the deposit was good enough...

Hello again, Ryan:

I agree, you need to talk to somebody... Sooooo, why not talk to a judge who, not only can tell you what the law is, he can issue a judgment on your behalf?

You can make an appointment with your local small claims judge by filing an action in his court. He'll see you shortly (and demand the other guy be there too), and his "fees" (the cost to file) are only about $50. The worst that can happen is that he rules against you.

excon

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Originally Posted by RyanATX

Thanks for the answers, I guess I need to talk to someone who knows Texas law, since landlord-tenant agreements are different state to state. I think what bothered me the most about this is that he told us we would sign after we did the walk through in a couple days, we could have signed at the moment had we known they would pull this, but I thought a receipt for payment of the deposit was good enough...

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But, again, the reverse side of this is what if "in a couple of days" YOU had walked away either because you found another place or just didn't like what you saw? The landlord had no guarantee you were going to take the apartment.

Then the landlord would be posting this question.

I have seen deposit agreements that clearly state "pending walk through" or "pending repairs."

I think the mistake was not having a written understanding before the deposit was turned over.

Sorry, been out of town.

I'm a landlord in Texas. I'll shed what light I can.

First a couple of questions. What "everything" did you sign besides a lease? Did they give you a receipt for the deposit, and if so, what exactly does it say? Are they not returning your deposit?

The following section that I copied and pasted is actually commentary from the Texas Apartment Association's Legal Counsel (attorney) regarding the refund of deposits after an applicant is rejected:

Difference between application deposit and security deposit. Keep in mind that a security deposit is a deposit to secure performance of a lease that has been entered into, i.e., signed by all parties. An application deposit is a deposit that is given by a rental applicant and accepted by the owner before a lease has been entered into. The purpose of the application deposit is for the applicant to have a significant sum of money at risk to keep the applicant from changing his or her mind after the owner has taken the dwelling off the market and started spending time and money to check the applicant out.

According to that, since you didn't actually sign the lease at the time you gave them your deposit, your deposit would be considered, according to Texas Law, to be an application deposit - not a security deposit.

The bigger issue, that I personally would go after on this one is this:

Section 92.3515 - NOTICE OF ELIGIBILITY REQUIREMENTS - NEW.

At the time an applicant is provided with a rental application, the landlord shall make available to the applicant printed notice of the landlord's tenant selection criteria and the grounds for which the rental application may be denied, including the applicant's:
criminal history;
previous rental history;
current income;
credit history; or
failure to provide accurate or complete information on the application form.
If the landlord makes the notice available under Subsection (a), the applicant shall sign an acknowledgment indicating the notice was made available. If the acknowledgment is not signed, there is a rebuttable presumption that the notice was not made available to the applicant.
The acknowledgment required by Subsection (b) must include a statement substantively equivalent to the following: "Signing this acknowledgment indicates that you have had the opportunity to review the landlord's tenant selection criteria. The tenant selection criteria may include factors such as criminal history, credit history, current income, and rental history. If you do not meet the selection criteria, or if you provide inaccurate or incomplete information, your application may be rejected and your application fee will not be refunded."
The acknowledgment may be part of the rental application if the notice is underlined or in bold print.
If the landlord rejects an applicant and the landlord has not made the notice required by Subsection (a) available, the landlord shall return the application fee and any application deposit.
If an applicant requests a landlord to mail a refund of the applicant's application fee to the applicant, the landlord shall mail the refund check to the applicant at the address furnished by the applicant.


Commentary. This section was added in 2007 to ensure that rental applicants are provided with rental eligibility criteria advising the potential considerations and reasons that an application may be denied. An owner is required to make rental eligibility criteria available to the applicant. See sample rental criteria, which comply with the new law.

Subsection (b) requires the applicant to sign an acknowledgement, which must be in bold or underlined print, verifying that the owner's rental criteria were made available for review. The revised TAA Rental Application contains the statutorily required acknowledgment.

Did they give you rental criteria? If not, they are breaking the law. They can't just pick who to rent to. They have to take the first "approved" applicant.

This is getting to be a bigger and bigger issue. What we're seeing where I'm located is that small-time private owners are basically getting slaps on the wrist for stuff. But it's coming down from Austin that the local JPs are to start enforcing this stuff.

Let me know if you need more, or if this just confused things.

Just to boil down what Rockin posted, basically, its what I said in my previous response. You may have the grounds to force them to honor your application. But I would be very cautious about forcing a landlord to rent to you.

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Originally Posted by ScottGem

just to boil down what Rockin posted, basically, its what I said in my previous response. You may have the grounds to force them to honor your application. But I would be very cautious about forcing a landlord to rent to you.

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Scott - well, everyone,

There's way more to the law about the rental criteria - I just didn't want to copy and paste even more, and my source is password protected...

Anyway, he can actually sue for damages and penalties if the landlord doesn't do this properly - OR force them to honor your application. Which I agree would be foolish.

I cannot find the exact "quote" that tells what penalties the landlord may be liable for, if they don't follow the selection criteria laws.

I know that if they don't "timely" return your deposit they can be held liable for up to three times the deposit, plus atty fees, plus $100.

I just put a call in to the apartment association. I'll keep you posted.

Orig. Poster... where in TX did this occur.