Legal Question in Consumer Law in Maryland

I am the president of a private nursery school located in Maryland. During our application process, we require admitted families to pay a 'deposit of the first month's tuition' in order to 'guarantee your child's space'. We have had several instances where families look to back out after paying this deposit, and they request a refund from us, since our admissions letter didn't state the deposit as 'non-refundable'. Our School Handbook states that this deposit is non-refundable, but new families wouldn't have been able to review that, and wouldn't know that. Are we at fault, and do I have to return their deposits because it doesn't say 'non-refundable'? Or, because the letter states that the deposit is to hold their child's spot, when they send in their deposit, does it then function as a contract that they are failing to perform under (and therefore I have the right to retain their deposit as damages, even if I don't call it out as non-refundable)?

Asked on 2/14/11, 7:40 pm

2 Answers from Attorneys

Phillip M. Cook Cook Legal Services, LLC

A prudent attorney would want to see that letter to the perspective parents BEFORE commenting on your legal obligations and rights thereunder. With that said, if there's even a question as to whether the deposit is refundable, you should consider refunding and having a lawyer re-draft your letter to parents immediately. With that said, please show the letter to a lawyer for specifics.

Best of luck.******The above is for informational purposes only and does not create an attorney-client privilege.*******

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Answered on 2/15/11, 7:57 am
Cedulie Laumann Arden Law Firm, LLC

Hello and thanks for your post. Your question illustrates the benefit of a good legal review of your contract/admissions paperwork before putting such in use. You've pointed out that the families may have operated under the assumption that the deposit was refundable, never agreed to contrary terms and have a plausible basis for requesting the deposit return. On the other hand, your assumption that the deposit was non-refundable gives you an argument or retaining the deposit. How far you want to press the issue you may want to decide in consultation with counsel (after review of the relevant paperwork).

Your scenario involves a bit of a goodwill analysis besides the legal issues as to what the contract terms may have been agreed upon --- You may want to immediately re-draft your letter to clearly reflect the deposit as non-refundable for future students.

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Answered on 2/17/11, 10:29 am

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