Does a good faith deposit prior to lease signing constitute a verbal agreement to rent a residential property?

UPDATED: Nov 21, 2011

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Does a good faith deposit prior to lease signing constitute a verbal agreement to rent a residential property?

Considered renting a home. Made it clear to the potential landlord that we could only enter a lease agreement for 18 months if a handicapped family member felt that he could navigate the residence safely. Gave landlord a good faith deposit equal to 1 month’s rent. Days later on visit to residence handicapped determined residence unworkable. Never took possession of property pending signing of lease which was never presented. Landlord claims verbal commitment and cashed good faith deposit. Did deposit constitute verbal commitment prior to lease signing?

Asked on November 21, 2011 under Real Estate Law, New York


Sharon Siegel / Siegel & Siegel, P.C.

Answered 11 years ago | Contributor

I am a NY lawyer.  A good faith deposit is not binding.  It is just what it says - a showing of good faith.  Depending on the amount involved, you may want to hire a lawyer to write a letter to the landlord making a demand for it back.




SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

From what you describe, rather than accept the landlord's offer to rent the home, you made him a countercounter: that you would rent the home IF a review or inspection of the same by a handicapped relative found that the property was suitable. The landlord then evidently accepted your offer, as evidence by his accepting a deposit you made after making your offer of rental upon finding of acceptability by handicapped relative. If this summary adequately states the facts and chain of events--that first you told the landlord you would accept only if your relative approved, and then after that you offered the deposit--then the landlord should not be able to retain the deposit. He accepted a contract which had a contingency or condition in it (the relative's acceptance); that  contingency or condition was not met, entitling you to rescind the contract. Note that if you had given the landlord the deposit first, before stating the condition that you needed your relative's approval, then it could be argued that you accepted the landlord's original, unconditional offer to lease (by providing a deposit), and are bound by it.

As a practial matter, if the landlord won't return the money, you'll have to sue him to get it back; since lawsuits themselves cost money and are not certain, you may wish to consider whether there is some settlement you'd consider acceptable (e.g. the landlord keeps 1/4 or 1/3 for his trouble?) to avoid litigation.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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