Negotiations concerning the lease broke down on July 24, 2013 with the defendant's
representative stating that the landlord would not agree to any further lease modifications.
On July 25, 2013 plaintiff advised the defendant, PECKELIS , by telephone, that she was
renting another space and requested a return of her security deposit in writing. The subject
property was rented to a third party on August 20, 2013.
APPLICABLE LAW
GENERAL OBLIGATIONS LAW § 7-103. Money deposited or
advanced for use or rental of real property; waiver void;
3. Any
provision of such a contract or agreement whereby a person who so deposits or advances money
waives any provision of this section is absolutely void.
Where a proposed
lease is never executed and the application is no more than an offer to lease subject to
negotiation, a landlord must return the security deposit notwithstanding the presence of a
liquidated damage provision, see Rivertower Assoc. v. Chalfen, 153 AD2d 196 (1st Dept.
1990).
A security deposit belongs to a tenant and may only be used by a landlord where there has
been a breach of lease, Ankhbara v. Sharplis-Esprit, 2015 NY Slip Op 50699 (2nd Dept.
2015).
The language chosen by the defendant in the rental application clearly refers to the $3,200 as
a security deposit. Therefore since no lease was entered into, the $3,200 cannot be retained by the
landlord based upon an alleged breach by the plaintiff, notwithstanding a provision in the lease
application for such retention as liquidated damages, Sidham v. Washington Square Realty
Corp., 95 Misc 2d 825 (1st Dept. App. Term 1978).
Since there was no valid lease entered into between the parties plaintiff is entitled to return of
the security deposit's return.
Decision After Hearing