Common / Legal Practice to Charge Non-Refundable Deposit to Apply for Apartment?

[subatomic]

What is the name of your state (only U.S. law)? New York City

Hello, this is not exactly a question about security deposits per se, but I wasn't sure exactly which category to put this in.

Perhaps this will just be a lesson learned for an eager and naive couple, but is it a legal, common practice to withhold a deposit if a prospective renter decides to rent another apartment?

We are a professional couple expecting our first child in the fall. The location is an affluent neighborhood (Boerum Hill) in Brooklyn and the agent is from a well-known agency in Park Slope.

We saw a duplex in Brooklyn that we put down a $500 deposit at the request of the agent. She said this was to show the landlord we were serious and decline consideration from other prospects while our application was vetted.

The deposit was in cash and the receipt said it would "be refunded in full if the applicants are not accepted by the landlord for this rental apartment." The receipt was dated but not signed by either of us.

Because the landlord took over a week to examine our application, we had time to see and apply for another apartment.

You can see what happened next -- when I broke the news to the agent to cancel our application, she informed me that the deposit would not be refunded for the stated reason above.

If this is a classic case of not reading the fine print and thinking of the consequences, so be it, but in hindsight I can't see this being legal or ethical. Requesting a deposit I understand, but only refunding if the application is rejected I don't.

Would we have any standing to pursue a legal remedy to recover our deposit?

Regards,
R. R. T.What is the name of your state (only U.S. law)?

 

[MIRAKALES]

The five hundred dollars ($500) was not a security deposit, it was a holding fee. A holding fee gives the perspective tenant first priority to the agreed upon rental while the rental application is reviewed and confirmed. If the rental application is denied by the property owner (for any reason) then the holding fee is refundable.
The rental application was not denied, therefore the holding fee is non-refundable. In the future, do not leave financial deposits or financial securities until you have completed your due diligence.
It is not fair to allow the property owner to process and screen tenant rental applications while tenant continues to search for other apartments.
There are costs and time commitments involved in processing and screening rental applications. How would you (as a tenant) react if property owners advertised unavailable apartments… and wasted your valuable time?

 

[ecmst12]

The deposit was never specifically described to you as non refundable. You didn't sign a lease or any other contract. The rental may not even have been taken off the market (you were not told it was). I'd say you have at least a 50-50 shot at getting it back if you go to small claims court over it. $500 sounds awfully high for a holding fee, too, especially if the apartment was not being HELD, and also too high for an application fee, even in NY.