Huge problem - what do I do in this situation? NYC

21 Replies

I'm the landlord and I rent an apartment out. Someone left a security deposit and we signed that she owes the first months rent on move-in date. We agreed on the date and the address of the apartment.

Now two days after the open house and after I tell everyone else they can not have the apartment - tenant calls and says that I have to return her security deposit because her boyfriend got another place.

We are in New York City. The problem is that I am no longer in the city and specifically came to rent out the unit.

In our lease it does not say refundable or non-refundable. Only security deposit. She says since it didn't say refundable I am required to give it back. 

Anyone know what to do? 

Can you explain further in detail about the contract? When was it signed ?when did she ask for a refund? What was the contract?..month to month or a year long contract? I am not a lawyer. But she may be on the hook for the entire year. And in your case maybe you could have her find a replacement tenant to cover her loss. Good luck. 

My lease and local rules might be different than yours,  but I'd tell he tenant that they owe money for rent until I  find another qualified tenant. No,  the deposit is forfeited for breaking the lease. 

Sounds like you don't have a lease contract? Did I read that right?

Sounds like you don't have a lease contract? Did I read that right? If she signed a lease then he/she is on the hook.

We signed the contract two days ago. She left only the security deposit and I told her she can drop the first month off when she moves in. It's a month to month contract.

 @Patrick Donohue  

She signed a month to month lease, so she has to give you 30 days notice. Sounds to me like she owes you for 30 days, starting on the day the contract starts. I would charge her for the first month's rent and give her back whatever the balance is.

Steve, this tenant does not get a "refund" as she has signed a contract for the unit. So now she has given notice to vacate. You should start to market the property again right away. If you in a tenant and they start a lease in 2 weeks then you can return he security deposit minus the two weeks lost rent.

This is a little tricky because she didn't get keys nor did she move in. People have a right to change their mind. If it were me, I would return the security and call it a day. She could take you to court, or, her boyfriend could throw a brick through the window. I personally am happy when things like this happen, she obviously is an idiot and the boyfriend finding a place is probably a lie. What couple goes out and separately rents places especially in the age of cell phones. If you asked me, you dodged a bullet.

I agree with Nancy. It's really a question as to whether you want a potential further headache or not.  Call it good - I'm sure you could get it rented in a second being in NYC and all..  Or, don't you have any of the other people's numbers from the open house?  Call em up.

Originally posted by @Nancy Curran :

This is a little tricky because she didn't get keys nor did she move in. People have a right to change their mind. If it were me, I would return the security and call it a day. She could take you to court, or, her boyfriend could throw a brick through the window. I personally am happy when things like this happen, she obviously is an idiot and the boyfriend finding a place is probably a lie. What couple goes out and separately rents places especially in the age of cell phones. If you asked me, you dodged a bullet.

 People do not have a right to change their mind once the contract is inked!  (I do, however, agree with everything else you said! lol) 

David, yes people do have a right to change their minds. I'm not an attorney, but consumers have a lot of rights in courts. It depends on the state, but people have three days to back out of most contracts. And in court, "rich" landlords are usually held up to a higher standard than "poor" tenants. Especially on these odd cases, that aren't clear cut. I could totally see a judge telling a landlord to give back the money to the tenant.

Nancy, people have the right to change their minds but that doesn't mean their won't be consequences. Also this is not really an odd case. The tenant signed a legally binding contract and further validated it with "consideration" being payment of he security deposit. This is hat the security deposit is for, as security to fulfill the contract signed.

I would contact the other prospective tenants and let them know the apartment is still available as someone else suggested.

The security deposit would also be refunded considering you would more than likely have to travel again in order to show the apartment to other tenants that are interested.

Makes sense to cut your losses and move on and in the future 1) inform all potential tenants that you will continue to show the apartment till first, last and security deposit is paid in full and they sign on the dotted line. 

This is not a huge problem, this is a very common problem. I would take a route in between what Nancy & the rest are saying. I would tell your flakey tenant that if you can get the place re-rented by the date she was supposed to move-in, she'll get her full security deposit back. If it takes a few weeks longer, you'll pro-rate it, if it is more than a month, you keep the deposit. Since this is NYC, if your place is in a half decent area, in okay condition and reasonably priced, it should re-rent within days and both of you will be happy.

The contract rules.  And speaking of the contract, what does it say about terminating the lease?  Does notice have to be in writing?

Although mitigation is not statutorily required, NYC caselaw suggests that it's preferred, and obviously in the landlord's best interest.

The security may be retained for failing to pay rent which is a clear default of the contract.  I agree with Greg.  Make reasonable efforts to relet, and if successful in the first 30 days, return the prorated portion of the security.  

She may have a three day rescind period. Talk to a lawyer but in the mean time lets start looking for a new tenant.

Thanks guys. 

I let her know if she can find someone I will refund her security. I called everyone else back and because of the delay they all took something else. That was real quick. 

It's upsetting because I had others that wanted it but I told them no. I don't feel right taking multiple security deposits from certain people but I don't know how to protect myself from this again. 

This is a huge problem since I am not in the area of this apartment (about 4 hours away - so 8 hours just in travel time just to rent it out! - ugh).

Property...manager. 

it appears that you never consummated the lease you should have had first months rent and security deposit try to negotiate a portion of the deposit for your time, in the future finish all the paperwork for a lease and read up on the laws for new york 

R.F. Plevy is correct, the contract prevails. I am an attorney, and what the tenant signed is what the court will look at if you were to have to go to court over this.
I would send tenant #1 a letter stating that under the contract they signed they must give you ____ days notice and as they failed to do so you have the option to keep their security deposit but as a courtesy you will re-advertise the premises and give them back their mitigated portion of the security deposit minus advertising costs and any travel cost to you if you find tenant #2. Of course, if there is a provision in your contract that allows them to change their mind up until a certain number of days and they are within that window then you must give back the deposit. Good luck!

I've switched to taking a "holding fee" which will hold the unit until they move in. The holding fee will become the security deposit upon move in.  If they do not take occupancy by the move in date, then the holding fee is forfeited.

I also only do month to month rental agreements with 30 day move out notices.

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