A deposit on an apartment we didn't move into has gone missing. Am I screwed?
July 16, 2008 12:09 PM   Subscribe

NYC real estate Q: We put a deposit on an apartment that became uninhabitable before we signed any forms or agreements. We decided to see if it was fixable, but in the meantime we found a new place to live. Now the owner doesn't want to give our deposit back. Are we screwed? A full, gripping narrative inside.

So my wife and I have been apartment hunting for about two weeks. Last Wednesday, the 9th, we found a beautiful apartment for a good price. They sold it as a new construction, no problems except for a spot of water damage on the one ceiling. I take a picture, we agree it'll be in the lease. We toured the place, made sure everything worked and then put down a deposit (500$) on the space around 3 that afternoon. We returned around 6 to do a final tour and fill out some paperwork. While we were there, it began to rain. And then the bed rooms and downstairs flooded. I don't mean a trickle, we're talking full on flood, pouring from the recessed lighting, from the walls, inside the closets. The place was no longer fit for living in, the downstairs bedroom areas were ruined.

We called the broker who said he'd call the owner, find out how severe the problem was and get back to us Thursday morning. In the meantime I very stupidly let him hold on to the deposit. Thursday morning comes and goes and no word from Broker. I call him in the afternoon, around 12, and he says he has nothing to tell me yet, but keep looking at apartments. My deposit, he says, is safe with him. I inquire about getting it back, he says it won't a problem, he won't pass it to the owner.

Thursday passes, Friday passes and Friday evening he calls to say, "No word yet, but hold in there, I'll call you on Sunday, give you an update and you can decide whether or not to proceed". Sunday comes and goes, no call, but it was my sister's birthday so I wasn't 100% on point.

I call him Monday morning and leave a voicemail. Monday afternoon we find a beautiful apartment with a wonderful owner in a bigger space for less money. Great! I call Broker and he doesn't answer, so I leave a voicemail. I call again in the evening, but don't leave a voicemail.

Tuesday, I call Broker and he acts like his voicemail is broken and he never got my message. In the meantime he says he gave the Owner the deposit. He hems and haws a bit, goes ice cold on me and says he'll call back, that he has to talk to his boss. That evening his boss calls my wife, leaves a voicemail, but doesn't answer our return call. I call Broker, leave a voicemail.

Today I call Broker in the early afternoon he says that the Owner sent in a crew, he's not sure if he can get the deposit back. I tell him I never consented to giving the deposit over and reminded him that he said he'd check in on Sunday. He says he'll have to call his boss and see what can be done.

He calls this afternoon and wants me to talk to his boss. Before I do this, I want to see where we are legally speaking. Yes, we handed the deposit to him, but with the assurance that the deposit would not go to the owner without our consent. We DID NOT sign ANYTHING. No application, no lease, no contract, no agreement. Dumbdumbdumb, I know. But what's the status of a deposit in this case?

Almost certainly a crew we have to be sent in to clean up regardless. The space would surely have been illegal to rent in the shape it was in. Are they just looking to make this hard or am I well and truly screwed? Help rescue my money!
posted by GilloD to Law & Government (22 answers total) 2 users marked this as a favorite
Small claims court.
posted by kimdog at 12:15 PM on July 16, 2008

Response by poster: Yeah, that's my nuclear option. I'd just as soon not take this that far- I'm just hoping to be able to say, "According to provision 31 of the real estate handbook..."
posted by GilloD at 12:18 PM on July 16, 2008

I assume you can't just do the obvious and cancel the check?
posted by jckll at 12:23 PM on July 16, 2008

yeah, not sure why you hadn't cancelled the check at some point along the way…?
posted by violetk at 12:29 PM on July 16, 2008

Response by poster: It was cash. He insisted on cash. Why did I give him cash? I was just so excited.
posted by GilloD at 12:30 PM on July 16, 2008

Yeah I was going to say... IANAL, but you have signed nothing. The broker is dicking you around. Stop payment on the check and move on.
posted by autojack at 12:30 PM on July 16, 2008

so you gave someone a wad of cash without any paperwork?
posted by violetk at 12:33 PM on July 16, 2008

Small claims court. We think you'll win. It's not really "nuclear."

Note, your comment "The space would surely have been illegal to rent in the shape it was in" doesn't really help. If a renter wants to rent a wet space, he can rent a wet space.

Good luck.
posted by JimN2TAW at 12:37 PM on July 16, 2008

Did you get a receipt?
posted by dcjd at 12:40 PM on July 16, 2008

IANAL but this doesn't sound like much of a deposit without any paperwork. It sounds like you gave this guy some money to reserve your spot (I guess?) but had a verbal agreement not to pass it on yet... so it's between you and the broker, and it sounds like he owes you $500, and it's got nothing to do with whether he can recoup that from the owner, since you never consented to that, right?

It really comes down to what you agreed you were doing when you gave him $500, and that's not entirely clear here.

Again, not a lawyer and this isn't legal advice, but if it were me, I would tell the boss that he was going to give me my money back, that I don't give a damn whether he can get it back from the owner, and that if he doesn't, he'd likely be hearing from the state licensing board. But that's just me. Still, I think it's faster, cheaper and at least as effective as going to court.
posted by SuperNova at 12:41 PM on July 16, 2008

It sounds to me like the broker is trying to force your hand. He wants his commission on a place that you don't want to live in. Regardless of anything else, legal or otherwise, if I were you I would do one of two things. Either speak to him or his boss this afternoon and simply say, "I signed nothing. I want my deposit back by tomorrow or I'm taking you to small claims court." End of conversation. No compromise, no debate, nothing. Say it clearly once or twice, then just hang up the phone. If he calls back, don't answer. Call him tomorrow morning and ask about how the deposit thing is going. If it sounds like it isn't going to happen, get the small claims stuff together and follow through on it. I suspect the real, non-bluffing threat of legal action will make him cough up your $500.

Or, if you want to settle it more quickly, go to his office, take a seat, and say, "I'm not leaving until I get my deposit back." All kinds of interesting things could ensue (including the cops being called), but I think this might prove surprisingly effective, especially if other customers come into the office during this time. Making a scene in person has a way of greasing the wheels.
posted by autojack at 12:41 PM on July 16, 2008

Oh, and by that least line I mean that the threat of escalation is likely to cause the broker('s boss) to cave... NOT that going to the state will get your money back, which frankly I know nothing about. But if it seems like a credible threat (which you should only make if he resists your first demand), it should get things moving.
posted by SuperNova at 12:43 PM on July 16, 2008

Response by poster: We do have a receipt! That we have.

Jim, I'm sure he could rent a wet space, but we're talking SOAKED. There was obvious damage to the ceiling- Even if he could rent the space, at the asking price he'd have a hell of a time finding a renterwith a ceiling that looked like it had been outside for a month.

But thanks. Is there any legal framework for deposits? I think what I'm really troubled by is that we were shown a space with the good faith that it was a solid, new construction and it turned out to be just the opposite. I have reason to believe they knew there was a problem and didn't clue us in on it.
posted by GilloD at 12:43 PM on July 16, 2008

I'll be honest with you, losing $500 in the NYC housing market is not so bad, considering deposits can range into the several thousands. What was the broker's name? For whom does he work?
posted by sondrialiac at 12:49 PM on July 16, 2008

Response by poster: Sondrialic- I don't want to release any personal info yet. We'll see how it plays out in the next day or two.

And yeah, 500$ isn't a fortune. But I'll be damned if I let every dishonest schmuck pocket money from me just because. I'm not an idealist, I don't believe everyone is trying to do good, but this is flat wrong and I don't feel like being taken.
posted by GilloD at 12:53 PM on July 16, 2008

Are you talking about a rental unit? Alot of new construction buildings, in Brooklyn, at any rate, are having to go rental because the units haven't been selling at nearly the frenzied rate the developers had hoped. In our neighborhood alone, there are at least five new developments that have sat for months, either unfinished or with a 20% or so sold rate. Many brokers have exclusive contracts with these places and are now realizing that commissions they thought they were going to enjoy on the sales of these units aren't going to materialize. So, I'm not surprised they're now playing fast and loose. And I think they know, absolutely, that alot of these units are crap construction, absolutely.

You can plead with them and tell them you have a receipt and that you want your money back and appeal to their good nature. You can threaten to take them to court - I doubt they'll take you seriously over what, for them, is a small amount of money. I also don't think either of these will get you anywhere with the sort of person who accepts a $500 cash deposit on a unit without any sort of written agreement.

I'd consider using the real estate blogs to my advantage in this situation, either by reporting this activity to them or telling the broker you will if you don't receive your money back - all of it - in cash. Many, many sites focus solely on Manhattan or Brooklyn or outer borough real estate. Many of them are read religiously by people interested in the market in general and those looking to buy or rent. You might let this particular broker know that many blogs keep watch on new developments and report extensively on the experience buyers or renters are having with their brokers and management companies. Telling their readership that the broker for this property is taking cash deposits on uninhabitable apartments and then refusing to return them would be of interest to many bloggers and their readership. Start with brownstoner, curbed, and streeteasy and go from there.

Sorry this is happening. Keep looking - you can find a better place than some crap new building like this. And next time never give anybody any money in exchange for nothing. What, exactly, was that deposit for? Too little to be a security deposit, so, to me, it just sounds like bs.
posted by TryTheTilapia at 1:41 PM on July 16, 2008

Write a detailed letter outlining the whole course of events. Send it via registered mail to Broker Boss. Threaten legal action if you don't have money in your hand within one week.

If they don't pony up the cash, do it -- take 'em to small claims court.
posted by desuetude at 1:51 PM on July 16, 2008

Response by poster: Tilapia- You got the nail right on the head. That is EXACTLY our situation.

I called the boss before, we had a somewhat contentious chat. I guess Broker wasn't super-straight with him, acted like we had a done deal. So from his perspective we're renters trying to back out of a deal and I can understand his frustration, it's a Renter vs Broker thing, He Said/They Said.

I'll definitely appeal to blogs- That's my next step. If he calls back tomorrow and offers us the cash, no harm, no foul. It's just that given all of the crap in the last few weeks, the last thing I wanna do is wage a web war against this guy. I just wanna move in someplace

And as an aside: Our new new place just failed inspection. It keeps coming.
posted by GilloD at 4:56 PM on July 16, 2008

In case you have to take it to small claims court, don't worry, they know how people in the housing market can be. My old roommates and I won a $1600 security-deposit-keeping case against a brooklyn landlord last month and we didn't even have a copy of the lease. Record all phone conversations with them if you're feely antsy (God bless New York being a one-party-consent call-recording state).
posted by soma lkzx at 6:32 PM on July 16, 2008

Sorry again. Uggh. And sorry, too, for the inspection on the new place. Step away from these people and new construction in general, is my advice. They're a gamble, particularly in this market, because financing is drying up and they're scrambling to sell, in many instances, unsold, subpar units that there's no money to fix. We walk past a brand new building frequently that was going for $1000 a square foot for a ground floor studio, was completed about a year ago, had ONE unit sold as of about six months ago, and there are bricks falling out of the facade. Already. With ZERO occupants. What a joke.

Remind them you have a receipt - make sure it's signed, dated and says what the receipt is actually for. Were there witnesses? If it's just a piece of paper that says, "I got $500 bucks from GilloD" and chickenscratch, you've got a bit of a problem on your hands. For all you know, they'll say they gave you a deepfreeze for your money and what you did with it, who knows? If they don't agree politely to give you back your money, I'd be even tempered, unemotional, and stick to the facts. "I have a receipt with your signature on it. We gave you this money in good faith. If you don't return our $500 in cash today, we will sue you and make it known on [influential blog here] that this building is falling apart and that you and your firm are charlatans. We will call the Secretary of State's office and report your shady business practices. We will call the Department of Building Development and report that your construction is unsafe, subpar and falling apart. We are not going to be stolen from and do nothing."

I hear you. $500 bucks from who knows how many eager tenants like yourselves adds up over time. I wouldn't let them get away with this either, particularly given the economy right now. And if you accidentally threw $500 bucks in the trash, you'd go through however many dumpsters you had to to get it back, right? Best of luck. Oh, and MeMail me - as luck would have it, our place is for rent in the near future. If it's in your price range, we can put you in touch with our landlord.
posted by TryTheTilapia at 7:21 PM on July 16, 2008

Sorry--I didn't mean to minimize your problem. I was making an oblique reference to the fact that if you don't feel like going to small claims court, shaming them in public might be the way to go.

At least post reviews on Yelp, CitySearch, and a post to a relevant blog/forum (depending on the neighborhood I could suggest a few).
posted by sondrialiac at 8:14 AM on July 17, 2008

Response by poster: Figured I'd just post a follow-up:

We had some contentious conversations, the broker tried to low ball me at 300$. We refused and consulted with a lawyer. He said what we'd been thinking- That they had absolutely no right to keep our money.

All we had to do was mention that we'd consulted with a lawyer and, ta-da!, $500 on the table. It would have been fun to learn small claims court, but I'm glad to skip the headache.
posted by GilloD at 6:31 PM on July 20, 2008

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