Refunding Security Deposit without a Signed Lease

[Robert Shedden]

We had a potential tenant give us a verbal commitment that he would sign our lease and move into our rental unit on November 6 (3 days from today). We sent him our lease via DocuSign last night. He viewed it last night and told us he would sign it this morning, send the security deposit via CashApp today, and send us the first full month's rent tomorrow. Well, he sent us the $1,500 security deposit this morning but DID NOT SIGN THE LEASE. He called us late tonight and said something came up and we would not be moving in or signing the lease. He obviously wants his full security deposit back. However, we took down the listing and already turned two people away. The property is located in Illinois outside of Cook County.

Are we under any obligation to return his security deposit in full? Do we return the deposit less the daily rate for each day it takes us to find a new tenant? Would you give him his full deposit back if you were in this position? We haven't made a decision yet and wanted the check in with the BP Community.

And, no, I am not looking for legal advice. I have an attorney and returning the full deposit will not put us in any financial distress. I am looking for an interesting discussion and to get a variety of viewpoints! :)

[Nathan Gesner]

Originally posted by @Robert Shedden:

Are we under any obligation to return his security deposit in full? Do we return the deposit less the daily rate for each day it takes us to find a new tenant? Would you give him his full deposit back if you were in this position? We haven't made a decision yet and wanted the check in with the BP Community.

Most state laws generally require you to make a "good faith effort" to find a replacement tenant. You can hold the original renter liable for rent up until a new tenant is found and starts paying. The original tenant agreed to rent starting November 6th. If you found a new tenant that starts renting November 15th, you would charge the original tenant from November 6th through the 15th and then refund any remainder.

However, I think it's petty. If a renter changes their mind within 24 hours, I'll refund the entire deposit. In your case, they haven't signed the lease and they weren't scheduled to move in for a couple more days. Just give them the deposit back, put it back on the market, and move forward. You'll probably lose a week of rent, at the most.