I have a question for anyone out there with an answer. I applied to rent a house from a local broker. He opperates as a real estate agent but also leases property. In fine print, it says that one your application is approved your security deposit is non refundable. We got approved, gave the deposit and then found our dream house and decided to buy instead of rent. Now they won't give us back our security. I have read as much as I can about this law and think this is illegal. I have taken the agent to small claims and the case is finally here (after 6 months). Do I stand a chance?

I would say that in court you will win but not all of the money, since he acted on good faith and you actually "rented" the apartment you would be liable for first months rent if you were on a month to month rental agreement.

So my bet is that the judge will allow the owner one months rent from the deposit amount but that is my guess

We were told the house could not be occupied until 3/1 and not sure if even then as there were major repairs to the bathroom being done.
We handed in a "security deposit" on 2/1 and backed out on 2/14. We were also told by the owner that the house goes in a day. He was not even aware that the property management company had put it on the market. If I am correct, in NH law for property management the owner has to given written permission for the management company to advertise and the property has to be livable at that time and available. The property management is saying that they do not apply to that law because they are a licensed real estate office. NH law for rental property says.

OK well at least the TITLE LV PROCEEDINGS IN SPECIAL CASES
CHAPTER 540-A
PROHIBITED PRACTICES AND SECURITY DEPOSITS
Should apply. If you have read this, what do you think?

Hello laurie:

I think you'll get it all back – or none of it back. A security deposit, is a security deposit. It is not rent. Plus, security deposits are always refundable.

Having said that, nothing is as clear as it appears at first glance. You called it a "security" deposit. Is that how the documents refer to it? Was it supposed to be the eventual security (damage) deposit on the house, or is it a smaller amount, which could be considered a deposit on the application, kind of like earnest money?

I think it depends on how the documents are written. If it was supposed to be a damage deposit, then as I suggested, he can't keep it. But, if it was supposed to be a deposit, that represented your good faith promise to move in, then I think you'll lose. After all, you didn't move in.

excon

Lets get this clear. You contracted with a real estate agent to rent a home. You were told the home would not be available to move in until 3/1. On 2/1 you handed over some money that you are identifying as a security deposit. On 2/14 you returned and cancelled the deal and asked for your money back and that was denied. You are also saying that the owner was not aware that the agent was offering the house for rent. Are those the correct facts as you have related them?

There are several points missing here. Did the real estate agent actually represent the owner? What did you sign when you handed over the money. What did that document say the money was? What did the document say about backing out or terminating it? If the agent was legally representing the owner, then the owner should have gotten the deposit, did he?

I have a receipt that has "security deposit" printed on it. The owner said to me that it was not available to move in until 3/1 or after the plumbing was fixed. The rental agent also told me this. ALL VERBAL.

What I signed can be found here:
http://www.peloquinrealty.com/Rentin...pplication.htm

The property company hold the security deposit but had not handed it to the owner of the property until I had cancelled and until I had already told them I would bring them to small claims. I had not given monies to or signed an agreement with the owner of the property just the rental agency. I had not even signed a lease yet.

Ok, this is a lot more needed info, thank you.

I was assuming that the real estate agent/broker would have owned these homes and was the owner and mangager from the first post.

So they are merely acting as the property manager, of course the application fee would not be refundable, but the deposit would have or should have been given to the owner of the house and has to be placed in a sperate bank accouint used for rental deposits.

And rental security deposits are always refundable at various times.

I would say that you will need the owner of the house to testify Or at least supply a statement that the house was not ready. Your word of what he said to you most likely will not be as good as the actual owner saying that.

It is still a toss up, since the written contract states it is not refundable and you knew that when you gave them the money and signed it.

You will need the specific statue in your state law, to show where the deposit has to be returned ( thus proving the contract you signed was illegal)
And an illegal contract has no value and can not be enforced in general.

Even at that, I will still stand that in small claims court it is often hard to say who will win.

Hello again laurie:

Well the more you try to clear it up, the murkier it becomes. I read what you signed. It's an application. It's not an agreement. At the bottom, above your signature, you are warranting that everything you are saying is true. That's fine.

But, then, the application talks about a “deposit”, and that you'll forfeit it if you withdraw. Nowhere on this application/agreement does it mention a requirement for a deposit, how much it is, or what it is to be used for. Apparently, he verbally asked for a “security deposit” beyond the application fee of $35, and the only documentation of that request, is the receipt.

I find that a bit strange since the rest of the application is so anal. However, if the only two pieces of paper you have, or there ever was, is the receipt and the application, then you should win because there is a big hole in his procedure.

In my opinion, the documentation (which only tells you that you'll lose your deposit, if thus and so happens, but fails to tell you what you'll get, if thus and so doesn't happen), will NOT be considered by the court, to be an agreement made by you.

You'll get it all back.

excon

PS> I haven't been paying attention to the owner vs agent discussion. I don't think it has anything to do with the legality of YOUR agreement and whether you'll get your money back or not.

I'm going to say you have a 50/50 chance. If the agent relied on your application, you may loose.

Changing your mind to buy a house does not effect your executed application paperwork. The fact that you did not sign a lease may be immaterial.

Finding your dream house does not get you out of your agreement to rent the property.

Dear Laurie,

How was this resolved? I am finding myself in the same situtation and would like to know your outcome.

Thanks!

Looking at the application you sign , it seems to be just a fee to apply to rent. Where I live we have two fees that are not refundable, credit and criminal check on you. How much was the fees? If this is what the fee was for you won't get it back. If it was for security deposit they have to return it.

Since this was posted on 8/22 I wonder if the date has come and gone. In case it hasn't I agree with you that its illegal to make a SECURITY deposit non refundable. The purpose of a security deposit is to protect the landlord if the tenant causes damage to the premises. All states have laws governing the return of that deposit.

So the question is whether this was really a security deposit under the law or whether it was just a deposit to hold the unit for you. If it was the former, then you should have gotten it back, but if it was the latter, then its gone.