He is the answer I gave to a similar question 5 minutes ago:
I think you will lose the deposit because the LL probably stopped marketing the property when you gave the deposit. The only way you'd get it back is if the LL got a new tenant with no delay and no extra costs to secure the tenant.
The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the Commonwealth of Pennsylvania. Responses are based solely on Pennsylvania law unless stated otherwise.
While my colleague in the above answer is undoubtedly right that the LL will not voluntarily return the deposit, I would encourage your sister not to walk away, but to sue the prospective LL in the magistrate's office. She should assert that the LL cannot enforce an oral agreement, nor can he keep a deposit when there is no subsequent written agreement. The legal term that applies here is called the "Statute of Frauds" and it applies to all real estate.