Landlord Can't Retain Security Deposit When No Lease Actually Executed

LVT Number: #30481

Prospective tenant who never took occupancy sued landlord for return of a $3,200 security deposit submitted with a lease application. A lease was never executed because the parties didn't agree on some of the lease terms. The court ruled for tenant. Where a proposed lease was never executed, and the application was merely an offer to lease subject to negotiations, landlord must return the security deposit despite a liquidated damages provision. The security deposit belonged to tenant, and landlord may utilize the deposit only in the event that a lease was breached.

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Brandon v. Peckelis: 2019 NY Slip Op 51535, NYLJ No. 1569909893 (Dist. Ct. Nassau; 9/23/19; Carlton, J)