Security/Holding Deposit Issues

[Dustin Lin]

I got the security deposit from someone and verbally told him this was used to hold the apt for him. But he told me he couldn't take the apt in the last minute before we signed the lease(so we didn't sign the lease yet), because of some personal problems; and asked for the deposit back. He stated the security was for the damage of property. 

After googled, I just learned I should use the term Holding Deposit instead of Security Deposit.

So my questions:

1. Can I keep all or portion of the money by PA's law?

2. What's the best solution for this case?