Legal Question in Real Estate Law in Illinois

Verbal contract / deposit

I had to move to Illinois because of a new job I accepted. While looking for a house to rent, I found a couple I liked. I thought I had decided on one (House #1), and gave the owner a deposit check and he said he'd send me an application. I also filled out an application for another rental property (House #2) while I was in town.

Two days later, after talking to the owner of House #2, I changed my mind. I called the owner of House #1 and told him that I was no longer interested. I also canceled the check I gave to him. The next day I received a lease agreement for House #2 and an application for House #1.

A bit more information is necessary. House #1 was not ready to rent. The owner was renovating the house. He was building a wall that I did not want or need, were I to live there. He told me he'd have the wall removed.

A month later, House #1's owner calls me and tells me that the contractors had already torn down the wall and had to rebuild it, which cost him $700. He wants the $500 for the deposit I gave him. In his view, we had a 'verbal agreement' that I was going to rent the house, and the $500 check I gave him closed the deal. My backing out of the deal, in his view, forfeits the $500 I gave him.

Do I owe this man $500?

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