Q: How to get my security deposit back? what are the options?
I would like to know if I can legally ask the business seller to get my security deposit back.
I was interested in buying the Japanese restaurant so I met the seller and his friend to check and look around the business. I wanted to hold the business so the seller's friend told me to make a $20,000.00 check for a security deposit. I gave the seller the deposit and received the confirmation," As received the deposit, I will hold this business for you and return this deposit to you if escrow is canceled". However, the seller didn't want to add the $20,000.00 in the escrow agreement so only $5,000.00 was stated as a security deposit. This was my first business purchase so I assume this is a normal transaction. Unfortunately, escrow was canceled and both parties agreed to breach the agreement. The seller mentioned I don't need to worry about the security deposit. He will make sure to give it back to me. I trusted him but can't wait anymore. I am sure that I have given him enough time
A:
Under California law, you have several options to try to get your security deposit back:
1. Send a demand letter: Write a formal letter to the seller requesting the return of your security deposit. Include a copy of the confirmation you received stating that the deposit would be returned if escrow was canceled. Set a reasonable deadline for the seller to return the funds.
2. File a small claims lawsuit: If the seller does not return the deposit after receiving the demand letter, you can file a small claims lawsuit in California. As of 2021, the small claims court limit in California is $12,500 for individuals. However, you may be able to file two separate claims to recover the full $20,000.
3. File a complaint with the California Department of Business Oversight (DBO): If the seller's actions seem fraudulent or deceptive, you can file a complaint with the DBO. They may investigate the matter and take action against the seller if necessary.
4. Consult with an attorney: If the amount is significant or if you believe the seller acted fraudulently, consider consulting with a business attorney who can advise you on the best course of action and potentially help you recover the deposit.
It's important to gather all relevant documentation, such as the confirmation you received, any written agreements, and proof of the $20,000 payment, to support your claim. The discrepancy between the $20,000 you paid and the $5,000 listed in the escrow agreement may complicate matters, but the confirmation you received should help establish your right to the full deposit.
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