How do I handle a situation where the tenant put down a deposit to hold a unit but now says she doesn’t want to move in? She is demanding her deposit back.
There are several issues here that require clarification before determining how to handle your situation. A primary issue is that, although you call the person a tenant, you do not explicitly state that the lease has been fully executed. If you and the person executed a written lease agreement, you can hold her to the terms of the lease. However, if she chooses to break the lease, you can only hold her responsible for the rent until a new tenant begins paying rent and you must exert reasonable effort toward finding a new tenant. You can probably also hold her responsible for paying extra expenses related to again having to market the property, including advertising and leasing commissions.
If it is an oral lease and there is no written lease agreement, it would be your word against hers as to the exact terms of said agreement unless there were witnesses on one or both sides.
You are not specific regarding whether the deposit was a security deposit under terms of the lease or was actually a separate holding deposit for which there should have some other written agreement. If the deposit was a holding deposit you must abide by the terms of the holding deposit agreement.
A holding deposit is associated with a potential tenant, the applicant, who has requested the landlord take the rental unit off the market until the applicant qualifies or otherwise fulfills the landlord’s terms and conditions for tenancy.
When the landlord holds the rental unit for an applicant, it should be considered off the market and unavailable to other qualified prospective tenants who may have to be turned away. If the applicant later changes her/his mind, the landlord may have suffered financial harm. In such a case, the landlord is justified in retaining all or part of the holding deposit within the limits allowed by state law and according to the signed, written holding deposit agreement (including what happens to the funds in the event of a tenant default). If there was no such written agreement, it could be difficult to prove the terms of the deal.