Is the space open now? If you have the space free now, but they wanted it held till Feb, for them, then you are out money. But if the space is filled now, only to be available in Feb. and they want the deposit back, you do have time to fill the space and not lose any money. Am I right? Ultimately, you should consider what is fair for all. If they gave you the 2 weeks fee (security deposit) that would be applied to their last 2 weeks of care, but there won't be care, and you have 2+ months to fill the spot, I don't think it is unreasonable to refund the money.

However, it does suck that they had a spot reserved somewhere else and didn't tell you. To me, it is so incredibly disrespectful and insulting, so I get why you wouldn't want to give them a break, personally. But professionally, it's different.

I am not allowed to do any of these things, deposits, holding fees, etc., so if I have this wrong, please clarify.