Once you enter into an agreement for a rental, the other party does not need to give you any money back unless they have a refund or cancellation policy of some type--that is, the law does not require refunds for cancellations by the guests/customers. If there is a cancellation policy, they don't have to give you back any more than their policy requires.You say that the deposit was $1,200, which is 50% of the full price--which means taht the full price would be $2,400--and that if you cancel, you are supposed to get 50% of the full price back. In that case, they are doing the correct thing by holding the deposit: you owe them half of $2,400, or $1,200; they are therefore keeping the $1,200. It would make no sense for them to return the deposit to you, then have to sue you for $1,200.