Legal Question in Real Estate Law in California

Re: Is a contract established if the deposit is not deposited?

Possibly. If an agreement has been made, and the landlord accepted a check, then a contract may have been formed.

Re: Is a contract established if the deposit is not deposited?

It depends on whether they agreed on all of the essential terms of the lease. Even if there was a contract, what are the damages? Presumably the landlord could give a 30 day notice to vacate even before the tenants move in. What have the tenants lost by being deprived of the opportunity to rent for a month or less? Certainly the landlord's decision is not discriminatory, because it is based on information from a source (A's mother) who is in a position to know.

Re: Is a contract established if the deposit is not deposited?

I think it is a major obstacle that "Tenant A agreed" to the return of the deposit. Even if a lease contract were formed, which is doubtful at best, the agreement of the landlord and one of the prospective tenants to a return of the deposit would amount to a rescission of the contract with full restitution accomplished. Further, Tenant A would be regarded as the agent of Tenant B for all necessary purposes.