Any way to get a deposit back if we didn't read the fine print?
November 19, 2012 9:09 AM   Subscribe

We kant reed. Husband and I were interested in an apartment and signed an application. We also paid a deposit, but did NOT sign a lease. Five days later, we changed our minds about the apartment due to costs. Apt. co. is saying they get to keep our $400 deposit because it stated so in eeny weeny font on the application. Is there anything we can do or is this a very expensive reading lesson?

We feel we were misled- upon inspection of the application, it did state the "deposit" would be held no matter what. We appealed to the apartment business office, and they stated "in order to be fair to everyone, we will not offer you a refund." They stated the deposit is being kept in order to "cover costs of having the unit off the market and held" for us. Husband has contacted the Better Business Bureau to see if they can help us. This is in the Minneapolis area in MN. Thanks much.
posted by ShadePlant to Work & Money (21 answers total) 1 user marked this as a favorite
Inasmuch as I'm not a lawyer: Yes, that's a very expensive reading lesson. In fact, frankly, that's why the deposit exists - to strongly discourage people from applying who aren't going to go through the rest of the process. I'm willing to bet you'd have the deposit refunded if your application wasn't accepted, but since you backed out, you're paying the price.
posted by Tomorrowful at 9:11 AM on November 19, 2012 [7 favorites]

Yeah, this fee exists so that the landlord isn't totally screwed in this exact situation.
posted by griphus at 9:12 AM on November 19, 2012 [4 favorites]

IANAL but yeah, you need to not ever sign things without reading them line by line.
posted by elizardbits at 9:14 AM on November 19, 2012 [4 favorites]

We thought "deposit" meant refundable! Bah. *grouses*
posted by ShadePlant at 9:15 AM on November 19, 2012

They stated the deposit is being kept in order to "cover costs of having the unit off the market and held" for us.

This is totally reasonable and very common. The only way to get this sort of thing refunded is to totally luck out and be dealing with a very generous landlord who then happens to find the perfect tenant moments after you bail.

I don't understand how you feel misled? It was being held for you, and I wonder what you thought the deposit was for?
posted by kmennie at 9:16 AM on November 19, 2012 [1 favorite]

A deposit, inherently, is only refundable if you meet the terms of the refund. The same way that if you put down a security deposit and destroy the house, you're not getting your security deposit back because you didn't meet the terms of the refund. Its insurance against your actions, basically.
posted by griphus at 9:16 AM on November 19, 2012 [3 favorites]

Kmennie, I thought it would be applied to the total deposit if we signed a lease, but would be returned if we did not. IME, the lease signature was always binding- nothing else. SO, now where are those "things I should know now that I'm 21, 25, whatever" AskMe threads?!! I got some advice for those.
posted by ShadePlant at 9:19 AM on November 19, 2012 [2 favorites]

$400 for holding an apartment for five days? Wow, that's quite a cushy safety net for the landlord.

It won't hurt to talk to someone who deals with tenant law professionally; looks like Minnesota has HOME Line, a statewide tenant advocacy organization that offers free legal help. Call 612-728-5767 or use their email an attorney page.
posted by mediareport at 9:19 AM on November 19, 2012 [2 favorites]

Oops, use this page for Minneapolis. They say they can't currently offer free legal advice in the city. Still, worth a phone call at least.
posted by mediareport at 9:22 AM on November 19, 2012 [1 favorite]

Kmennie, I thought it would be applied to the total deposit if we signed a lease, but would be returned if we did not.

Well, think of it this way - under what circumstances would it just be kept, then? I mean, what's the point of it if they're not going to use it as a lever to keep you from applying and walking away?

(I will say that $400 seems awfully steep in my experience too; I'm used to a $50 or maybe $100 deposit. So you might have an avenue there. But I don't know the particulars of your rental market or laws, so...)
posted by Tomorrowful at 9:25 AM on November 19, 2012

In the future, assume that a deposit is non-refundable unless explicitly stated otherwise. This is generally the case, especially with something like an apartment, which the landlord presumably stopped showing once you put down the deposit. He's out a potential renter and the accompanying income -- possibly for the entire month -- because of your decision, which is exactly why this sort of non-refundable deposit is put in place.
posted by asnider at 9:35 AM on November 19, 2012 [1 favorite]

IAAL, IANYL. I occasionally do some landlord-tenant work.

Yes, this is an expensive reading lesson. There are cases in pretty much every state where being blind is not a defense to contract, so "eeny weeny font" is not helpful. I do not understand why you think you were misled.

"IME, the lease signature was always binding- nothing else". From now on, the safer course is to assume that every request for a signature is intended to create a binding agreement. That is why the signature is being requested in the first place.

A few people have commented that $400 is a large sum, but that in itself is not going to release you from the contractual obligation regarding the deposit. Residential tenancies tend to have a fair amount of statutory and other regulation, so *maybe* there is a statute that says there is a maximum amount that such an application deposit can be. However, the property management companies are generally very savvy about their legal obligations because of the liability involved, so I do not think that the amount of the deposit is going to turn out to be unlawful.
posted by Tanizaki at 9:38 AM on November 19, 2012 [1 favorite]

For further reference, HOMEline has a good publication for renters that should tell you almost everything you need to know about renting in the Twin Cities. Most local libraries will have a hard copy in the system, too.
posted by Electric Elf at 9:54 AM on November 19, 2012 [2 favorites]

I live in Minneapolis too. This may be a local thing -- some buildings do mildly shady stuff like take several full-month-rent deposits on the same unit (and refunding the ones who don't get it). It's a very desirable rental market right now!
posted by miyabo at 11:09 AM on November 19, 2012

OP, were you misled by the landlord or did you mislead yourself? If the person who showed you the apartment or took your application said or implied you could have a refund, you might have some channels to get your money back.
posted by MattD at 6:19 PM on November 19, 2012

I am a Minneapolis landlord, I am not your Minneapolis landlord. See if this link sheds any light on your question--it differentiates between "application fee" and "deposit" pretty clearly and supports my initial reaction to your question which was "that's shady as fuck".
posted by padraigin at 8:04 PM on November 19, 2012

Specifically note that an application fee is to cover the cost of checking your references and background, which IME is between $25-60 per individual depending on how broad a screening you do.
posted by padraigin at 8:06 PM on November 19, 2012

Alas, digging into this deeper this morning, you are probably screwed according to the Attorney General's office:

"Landlords are also permitted to take pre-lease deposits. These deposits are required to be in writing and the document must completely explain when the money will be retained or returned. A landlord who violates this statute is liable for the amount of the deposit plus one-half that amount as a penalty. If the landlord and the prospective tenant enter into a rental agreement, the pre-lease deposit must be applied to the tenant’s security deposit or rent. (12)"

If the rental application indicated that they'd keep the deposit, then yeah, a very expensive reading lesson. I'm really sorry, they suck for not having made clear what they were doing to you.
posted by padraigin at 7:44 AM on November 20, 2012

"The payment of a deposit holds the apartment for the applicant subject only to the applicant successfully being screened and accepted for occupancy. By paying the deposit, applicant is asking owner to take the apartment off the market and to lose the opportunity to market and/or rent the apartment to others. If applicant changes his or her mind about the apartment, the deposit will be forfeited and applied to owner's loss of marketing time and/or rent loss and will not be refunded to the applicant."

Direct quote, in eeeny weeny font. I appreciate everyone's insight; I think we felt "wronged" because I have never even thought there was a "pre-lease deposit" and we neglected to read the fine print. I'm also pissed off because $400 is way too much to account for even rent in 5 days. Even if we had gotten part of the money back, e.g. "rent for five days is blah, so you get the remainder back" would have been helpful.
posted by ShadePlant at 1:57 PM on November 20, 2012

One of the reasons for the deposit to be so large is so that it becomes prohibitively expensive for prospective tenants to not take the apartment after agreeing to do so. The landlord doesn't just miss out on a few days of rent, but chances to rent it as well. So, for instance, if the apartment ends up on the market for another month after you guys decided not to take it, he's missing out on that income that could have, potentially, been his if someone decided to take the apartment in the five-day span it was off the market. So a very large deposit is a way to hedge against that situation. Some landlords don't mind a zero-sum-game (as evidenced by the $50-$100 deposits above,) some do.
posted by griphus at 2:11 PM on November 20, 2012

(Of course, that's giving the landlord the benefit of the doubt in the situation.)
posted by griphus at 2:12 PM on November 20, 2012

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