I think that you are morally 100% entitled to keep their deposit. Legally, I am not completely certain, but I am pretty sure that her texts/emails confirming that she wanted the spot, that she knows it's in case she ducks out at the last minute are as good as a signed contract.
I would NOT return the deposit. I would be completely prepared to battle with her on it. What a sneaky manipulative b---- to do this to you. She has disrupted your ability to provide for your family. I would afford her no niceties.
Good luck. I hope to read a positive followup soon.
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