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?