Approved apartment application?

I received an approval on an apartment. The application states if they approve the application but I do not execute a lease then I forfeit the good faith deposit and have to pay a penalty of first month's rent. I understand the good faith deposit but it seems to me the $699 for first month's rent is in bad faith and without a lease I don't see how it is legally binding. I live in Texas. Can anyone help me with this? They are threatening to turn it over to debt collections if I do not pay.