Question on Return of Security Deposit

[Joshua D.]

Hey guys,

  We are located in PA. I have a question regarding the return of security deposits.  We had a tenant who took a tour 3 times of our rental, signed the lease, gave us the first months rent and the security deposit, and asked if they could have the keys a week early, to start moving in.

Okay.  So 3 days prior to moving in, they text us saying that they don't like the broken register covers, and that they want a door on the downstairs room. Okay, no problem. We add a door but can't fix the register covers, as they would need to be custom ordered and we rent as-is. The next day, October 1st, 1 day prior to the official start of their lease on November 1st, they inform us that they just really decided that they don't like the house and don't want to move in.  I told her thank you for letting us know, and refunded their first months rent (same amount as the security deposit.) I had her sign a lease termination notice on the 31st of October, and they gave us back the keys and never moved in.

SO. I'm going through my papers a few months later and run across her lease termination agreement signed and rental agreement and think, eh. I don't need these anymore, it's settled. And throw them away. Yeah, stupid I know. But I've learned.

I get an email literally a week later where the 1 tenant (there were 3 of them on the lease, originally) is saying that I have no right to withold their security deposit and she's going to take us to court and retrieve double the deposit plus attorneys costs if I don't return it. 

What would you do? I wrote back advising that I'd be filing to retrieve the month of lost rent I had due to her backing out 1 day prior to the lease beginning, and she had already taken possession of the house by taking the keys.......Do I have a leg to stand on here, without a signed lease or termination?? 

Thank you guys!!! 

[JD Martin]

You should have gave back the deposit instead of the rent. Then you re-advertise, and if you get it rented before November 1 you refund them the difference. Otherwise, that's your damages. 

Lessons:

1. Don't let tenants dictate what you're going to do. They saw the house without a door and broken registers. I would have had non-broken registers, but that's beside the point. When they e-mailed me about the door I would have told them "Sorry, house is rented and accepted as-is". 

2. Don't let tenants have the keys early. I will note that we make exceptions to this all the time, as we usually let the tenants start taking occupancy 24-48 hours before the official start of the lease so long as utilities are transferred (assuming the unit was vacant). Any more than that, and we pro-rate the lease to the point they want to start occupying - i.e., if they want to move in a week early, we pro-rate an additional 25% rent into their opening costs.

3. Don't provide keys until utilities are transferred. Transferring of utilities is close to the surest thing you're going to get that they actually intend to occupy the premises. Some people will use deposit+rent as a way of hedging their bets while they look for something else, since most people know that landlords won't hold houses for them. So they pay, keep looking around, find something better and then get their money back. 

4. Don't throw away documents. If you don't want the paperwork, it takes seconds to scan it or take a picture of it with your phone.