Tenant-Landlord legal advice

A week ago 7 friends and I were interested in pursuing renting this 8 bedroom house, and to move forward with the process the Landlord said we had to put down a nonrefundable $400 dollars and have 5 days from then to get all of our co-signer forms and applications in.

Fast forward 3 days and two of my roommates back out of the deal, and we can't find replacements in the two days we had to get the paperwork in. So far we have signed NOTHING, and I told the guy we couldn't move in and I put a stop payment on the check.

He is now threatening to take me to small claims if I don't give him $400 dollars. I looked online and the max application fee (which is what he called it) is $37 and is used to cover his fees for running credit checks, but we never even got to that point since we handed in no paperwork. He gave me a receipt for the check and it says "deposit" written on it. Under CA law a landlord can't market a deposit as nonrefundable. I guess the fine line is if this is a "holding deposit" (even though he never called it this). Anyone have any knowledge in this area?


Additionally, he was violating city code by marketing the house (VERBALLY) that the guest house in the back was two bedrooms, when in fact it is legally just one 200sqt room with a 300sqft storage area. Even told us to go as far as rearranging the room if city ever showed up to make it look like a storage room. Should i try to hang this over his head and threaten to call the city on his illegal guesthouse he is marketing?

I dunno, you gave him the 400.00 check with the understanding it was a non-refundable deposit. You obviously agreed to it since you paid him the 400.00.
What's your word worth?

I have been a Landlord for about 12 years. If you have not signed anything he can do nothing. As Barry said it's up to you if you want to keep your word. I find it very strange he took a check from you without having you sign anything first, sounds a little funny to me.

However is seems as if he was never legally empowered to label it as nonrefundable.

He has until June to get the house rented, that's when the current tenants lease is up. Plus he did give us an out when he told us the day we gave him the check that he was technically breaking city code having us live in the guest house. After talking that party over with my parents that night they weren't comfortable co-signing the agreement since i wouldn't be insured if i was hurt while living in the "storage room".

...an 8 bedroom guest house?

You agreed to the 400.00 non-refundable deposit. A 400.00 loss is a bummer, but a lesson well learned.

Why not sit down with the guy, explain your situation and see if he'll let you slide on your verbal agreement...Maybe he'll be gracious.. maybe he'll agree to half.
Is your word worth 400.00?

Sounds like the LL is a douche, and probably just trying to end up with some money out of the deal for his time.

I say call his bluff. If you do end up in court, countersue for a reasonable amount (more than $400) for missing work / lost income / etc. Tell the judge about the storage room / insurance / inhabitability issues. Sounds like there wasn't enough legal livable area for a group your size anyway.

its a 6 bedroom house and during the walk through he marketed the guesthouse as two bedrooms. But the next day when he sat down he told us we would be illegally having someone set up a room in the "storage room". The current tenants are currently violating this as well.

Taylor,
it sounds like your parents are wise- imagine how things could turn out if someone was injured/killed with your name on the lease.

Trace, I find it disheartening that your handshake and promise is good as long as the law says so.

Taylor
i have a real estate professor named John Hames at chico, he also is a lawyer, you should go talk to him, he would deffinitly tell you what to do.

his office hours are Tuesdays 11:00 - 12:00 Tehama 462 hes super nice and im sure he could let you know if you have a contractual agreement. the are such things as a verbal agreement but i think this case could only stand if you stated the conditions of you agreement and that would be to have a specific amount of roomates. from what i know, if he is breaking the law you should cancel the check and tell him to beat sand.

on another note i am also have a contract law professor and im sure he could give you advice to. let me know what you need and im sure we could arrange a meet

If you haven't signed anything then he doesn't have a leg to stand on if he tries to take you to small claims court.

400.00 is outrageous for an application fee - you got taken advantage of. Sounds like you're lucky this deal didn't happen.

Look at the facts, Barry. The landlord is marketing the place on a dishonest premise, even telling them they'd need to mislead city inspectors, so the LL's word is basically moot. There are also the insurance issues - both health and property claims could be denied due to living in a storage room. Plus, it wasn't Taylor that backed out of the deal anyway - it just unfortunately happened to be him that wrote the check. If anything, Taylor's buddies that backed out of the deal should be the ones paying.

Just tell the landlord he's not getting the $400 and you'll call the city on the guesthouse thing if he ever even calls you again. Even if he wins in small claims court, he'd have to to jump through hoops to actually get the money from you.

Tell him to shove it. He hasn't done anything deserving of the 400.00, no credit checks, nothing. Legally, the only way he would be entitled is if he has turned away potential renters, which he would have to prove. Like Brett said, threaten him with calls to the city about people living in a storage room.

Go on Judge Judy!

Trace,
Trust me, I see the situation clearly and I agree with your assessment.We differ only on whether or not Taylor should keep his word.
I say he should simply because he gave his word and it should be golden. You say no because the other guy has no legal foothold and he's a douche.
What I'm hearing is that your word is good...sometimes.. If you get down to the brass tacks that's what you're conveying.

I dunno, heh..There might be something wrong with the way I think. The more time I spend on-line the more I realize I am an odd ball.

Michael - thanks a lot man, I will definitely have to go talk to that professor on tuesday.

I think I will email him offering to pay the $10 dollar fee his bank charged him and see if he can produce an itemized list of any other charges that he incurred, which is highly doubtful considering this was a 3 day turnaround and he has until June to find new tenants, which will be easy considering this house was one of the most popular houses in my college town. Its not like he missed out on any rent while having to just re-advertise on Craigslist for free. If he still wont budge i'll see him in small claims.

Was also advised to write down everything he said about the "guest room" and have it notarized before I'm summoned, hopefully that will hold over better than just my word in court.