Tenant Security deposit, no lease

[Natelya G.]

I removed my rental from the market on December 21st when my tenant paid her deposit electronically. She was supposed to move in on January 15, 2019. While cleaning the apartment a situation occured of her family member stealing something of value of mine that cost $450. After asking the soon to be tenant about it, she stated the stolen item would be returned the next day, and it was. We decided not to enter into a lease with her but wanted to know if we must return all, part or none of her Security deposit?

[Jennifer T.]

You need to return all of the SD because you are the one breaching the agreement with the tenant.  Under the circumstances, I'm not saying that is a bad decision.  But it's still a choice that you are making for a bad act that wasn't even committed by the tenant.  So the tenant needs to be made "whole".