Unfair Laundry lease with shady company

Unfair Laundry lease with shady company

Real Estate Investor · Kansas City, MO · Member since 2014 · 7 posts · 2 votes

I recently bought a 6-plex and there was a washer and dryer in the building. Nothing about any contract or lease was mentioned by the seller at the time of closing, and admittedly, I didn't ask what the deal was with them. Now Jetz Service Co. are refusing to remove their washer and dryer from the building and threatening me with legal action if I don't give them building access. The guy from Jetz sent me a lease signed in 1998, by someone who owned the building before the company I bought it from, with a 25% owner /75% Jetz revenue split. He claims it's still valid and in fact just renewed last September until 2018 (automatically renews every 5 years). I had never seen these documents before he sent them, was never informed of the "lease", and have no interest in doing business with the company, mostly due to the guys attempts to threaten and intimidate me into signing documents confirming the validity of his "lease", but also for the fact that the 25%/75% terms are awful. It would be a big money loser for me.

I also recently found out that the previous owner never received any payments from Jetz. Jetz claims that this was because the owner wouldn't sign anything from them, and they tried to send payments, but they were returned as undeliverable. So for at least a year, no payments have been made on their "lease". I am currently asking for proof of these "non-deliverable" payments from them.

I am getting ready to do major renovations on the building, and I don't want to be liable for any damage to the machines that may occur. What is the best way to make them pick up their machines and keep this from going any further? I really don't need the legal expense right now, but it sounds like these companies make a business of being shady and forcing this stuff on unsuspecting property owners.

Thank you! I'm a new user of this site by the way. Glad to know there are helpful people out there!

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Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
12y

Further thought. Accept absolutely no payments from these scumbags for anything, as that may be interpreted as accepting the lease. Otherwise, kick 'em to the curb. They seem to be willing to call your bluff (at least until their equipment is sitting on the curb), so don't bluff, just do it. Right or wrong, just my opinion. As for the "title co. issue"...no recorded lease means no title issue, no enforceability on third parties, IMO.

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  • Real Estate Investor · Member since 2013 · 866 posts · 487 votes
    12y

    You are probably going to need a lawyer to smack these dirtbags down.

    Send them a certified, return receipt requested letter stating you will be starting major renovations on whatever date. If they have not picked up their machines by (give a definitive date and time) they will be removed and stored at their expense and any damage to them during the move or storage will be at their risk.

    Also, you are in Missouri, make sure continually renewing 5 year leases are actually valid in your state.

  • Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
    12y

    What would happen if you changed the locks, put the washer and dryer outside, and then called Jetz to come pick up their junk?

    Could they sue you? You didn't sign anything with them.

    Honestly, If this were me and I was stuck in a ridiculous lease like that, I would fill that washer with cement like on Seinfeld.

  • Brandon TurnerPro Member
    Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes
    12y

    This happened to me as well, but not quite as severe, as I had a 50/50 split. My lawyer said we could fight it if I wanted, but I decided to just stick with it. But yeah, the automatic renewal is shady!

  • Chris K.Pro Member
    Investor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
    12y

    Just curious what the lease says the penalty is for breaking the lease?

  • Real Estate Investor · WI · Member since 2013 · 125 posts · 33 votes
    12y

    My first reaction would be "I'll keep the machines for a 50/50 split, on a non-auto renewal yearly contract, OR You can pick up the machines outside the property on xx/xx/xxxx date, thank You have a nice day. . .Click.

    There also may be a play where You could claim the machines as abandoned property the same way a landlord can get title to a car, left by a tenant. Tell Him He can have the machines back for the "storage" charges.

    Or, call His competition I'm sure they'd be more then happy to tell You how to get rid of this jerk.

    Put the ball in his court and make Him worry about it.

    John

  • Investor · Fishers, IN · Member since 2012 · 520 posts · 499 votes
    12y

    Not to toot my own horn, but as far as I know, I am the only person ever successful in evicting Jetz from one of my apartment buildings I owned many many moons ago.

    Their lease provides that they actually pay rent for space in your building. If they haven't paid, you can take them to court and "evict them" for non-payment of rent.

    I did, and I Won!

    The president of Jetz was so impressed that he flew to Indianapolis to have lunch and work things out. We did, and actually became friends through the whole ordeal.

    More of a story than anything, but maybe you can glean something from this that will help.

    And not to sound like a broken record, but laundry leases, tenants, toilets, and trash and everything else that goes with apartments is what led me to sell over 100 houses and 400 apartments and invest in Self-Storage.

    I have 5,000 units, and 1/100th the headaches of 500 rental units!

    Good luck.

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    12y

    State laws vary, but assuming this lease was not recorded, you should have absolutely no obligations to it. If they have a valid claim, it would be with one of the previous owners. I'd certainly send them a "get your crap out of my property by such date, or it goes on the street" letter, then do it.

  • Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    I think the buyer is new to the game and fail to do his due diligence and ask questions.

    Joe Gore

  • Real Estate Investor · Kansas City, MO · Member since 2014 · 7 posts · 2 votes
    12y

    Thanks so much for all the helpful replies! I think maybe the suggestion to call the competition might be helpful. I would be interested in keeping laundry on site for my tenants, and a 50/50 split might be ok, but there's no way I'm going to do business with this company after all the threats and attempts at intimidation. Like I said before, involving lawyers would be my last resort simply because I don't want the headache of a drawn out legal battle.

    Just an update: When I emailed and asked for proof that Jetz had made every reasonable attempt to pay their rent in the last year (Me: "You claim that the rent checks were issued to {previous owner} and returned as undeliverable. {Previous owner} claims that you told them the rent checks were being sent to the owner before them, Mr. ------. If they were being sent to Mr. -------, I'd like to see proof of that. If they were being sent to {previous owner} and returned, I need to see scanned copies of every check, along with proof that the payments were returned as undeliverable before we can proceed. I also need to know how long it's been since any payment has been made for these facilities. I would also like to see your proof of ownership of these machines. As I stated before, I had never heard of your company before receiving your email, and I can find nothing on either machine that would connect them with Jetz Service Co.)

    The guy responded with this: "In reading your response it is obvious you're not interested in mitigating the circumstances and accepting our offer. I assume you chose to disregard my suggestion to talk with your title insurance company. If you were unaware of the lease you should have issue with the title company, not Jetz. We are sincerely open to a reasonable resolution but will not will not continue the unproductive back and forth. As I stated before please do not underestimate Jetz Service Company's resolve and willingness to defend and protect our lease rights. If we're forced to seek legal action any potential resolution from that point forward, as per the lease agreement will include any attorney fees and costs we incur."

  • Real Estate Investor · WI · Member since 2013 · 125 posts · 33 votes
    12y

    @Scott Meyers Maybe You could put in a call for the new guy?

    John ;)

  • Real Estate Investor · Kansas City, MO · Member since 2014 · 7 posts · 2 votes
    12y
    Originally posted by @Account Closed:
    I think the buyer is new to the game and fail to do his due diligence and ask questions.

    Joe Gore

    Yes, you're right, I made a mistake by not asking. I believe I stated that in the 2nd sentence of my original post.

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    12y

    Further thought. Accept absolutely no payments from these scumbags for anything, as that may be interpreted as accepting the lease. Otherwise, kick 'em to the curb. They seem to be willing to call your bluff (at least until their equipment is sitting on the curb), so don't bluff, just do it. Right or wrong, just my opinion. As for the "title co. issue"...no recorded lease means no title issue, no enforceability on third parties, IMO.

  • Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
    12y

    I think if everytime they went to service the machine, there was 400 pounds of concrete in it, they would change their tune. Just sayin'........

  • Detroit, MI · Member since 2009 · 114 posts · 40 votes
    12y

    Not sure about your state but isnt the lease tied to the owner and not the building? Maybe Im crazy but I think it is going to be hard to enforce a contract where one of the current parties is not party to the executed contract. You were not able to negotiate or agree to the terms. Was the lease included in the sale of the property and listed with the title company? Could be wrong, Im not an attorney.

  • Real Estate Investor · Kansas City, MO · Member since 2014 · 7 posts · 2 votes
    12y
    Originally posted by @Wayne Brooks:
    Further thought. Accept absolutely no payments from these scumbags for anything, as that may be interpreted as accepting the lease. Otherwise, kick 'em to the curb. They seem to be willing to call your bluff (at least until their equipment is sitting on the curb), so don't bluff, just do it. Right or wrong, just my opinion. As for the "title co. issue"...no recorded lease means no title issue, no enforceability on third parties, IMO.

    Wayne,

    Thanks for the input. The lease was recorded, way back in 1998 when it was first signed by the owner before the last owner. I just think it's so ridiculous that tenant law would afford the same protections to a company's washer and dryer as it would a person. Doesn't seem right that if someone isn't living there, they should be able to claim "renters rights". This kind of agreement with a company should be a contract, not a lease. But if it was, they couldn't try to screw over unsuspecting landlords like me...

  • Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    12y

    Since the lease was recorded and you are the new owner , you should be entitled to all the back payments and interest . Or you could just 1099 his company for the "debt" of those lease payments , and interest .

  • Flipper/Rehabber · PA · Member since 2010 · 60 posts · 8 votes
    12y

    i would call their bluff. Send certified letter stating to come get their crap on x date. Put it outside and see what happens. I think they are trying to strong-arm you.

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    12y

    Well, since the lease Was recorded, you were on notice of it's existence. This does change the enforceability of the lease somewhat. You may need to look to the laws regarding the auto renewals, and perhaps non payment as a breach in order to void the lease but that might have to be done by the previous owner.

  • Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    12y

    Lawyer up. Jetz looks like a huge company. @Scott Meyers may be your key man. He has the insight. Maybe you two can talk about the situation outside of the forums.@Scott Meyers

    We own our coin-op laundry equipment and retain 100% of the profits. Not a bad way to go if you can manage it!

  • Real Estate Investor · Champaign, IL · Member since 2013 · 114 posts · 55 votes
    12y

    any updates?

  • Lender · Seattle, WA · Member since 2013 · 17 posts · 9 votes
    12y

    I was in a similar situation, only with a worse split...0%. My business partner and I purchased a fourplex and we were given the laundry lease--it was recorded and had a 40-60 split in it. When we called the Laundry service after buying the building, they said they had an oral agreement with two or three owners ago saying that it is a 0-100 split. Fortunately my business partner is also a real estate attorney. We went after both the escrow company and the laundry company. They decided to break the lease immediately and remove their equipment. We bought new equipment and get 100% of the laundry now.

    But, you definitely have a good case against the laundry company. You might be able to go after the Escrow company and the Title Insurance--especially if the lease was recorded and they did not see it.

    Please update us with how things are going. Best of luck.

  • Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    12y

    i'd call their bluff too.

    they are trying to use their "big name" and scare you that they have a great legal team.

    #80 bag of quickrete is just $3.65. i like rob's idea better though.

  • Real Estate Investor · Kansas City, MO · Member since 2014 · 7 posts · 2 votes
    12y

    Sorry all for the very very delayed response here!  I've been busy getting my building completely rehabbed.

      To give everyone an update, on the laundry lease situation, I did end up getting the title company involved.  Since I was not notified at the time of sale of an existing recorded lease on my property, the title company was on the hook for resolving the matter with JETZ.  The title company tried their hardest to get me to accept the terms and let this horrible company keep their crappy old equipment on my property, but I refused.  In the end, the title company paid off JETZ to break the lease on my property and remove their equipment.  Everything was recorded, and it's a done deal.  I will say I went through a LOT of extra work and untold amounts of stress and anxiety over being threatened by this unethical company, JETZ for something as small and stupid as a washer and dryer at a 6-plex.  I'll certainly never make that mistake again.  On the upside, I found a great deal on a scratch and dent coin-op washer and dryer from the local Sears outlet.  It's going to take awhile to pay off the $800 or so I spent on them, but the relief of never having to deal with another mobster company like JETZ is well worth it.

    Thanks again to everyone here for the very helpful input.  I'll try to do better at keeping up with the forums from now on.

  • Real Estate Investor · Avon, CT · Member since 2014 · 16 posts · 3 votes
    12y

    Something to try... You could go to a lawyer and put a lean against their business for non-payment and charge a late fee... The lean could be for any amount you want so chose something high. It doesn't hurt them but it would limit their ability to refinance or do any financial transactions. Also... since they claim they have not been able to pay for the last x years, you should say you are now the legitimate beneficiary of all of that money and expect payment immediately. Finally, see if the lawyer can terminate the lease at the next renewal period. Normally, it is just a simple notice that is required. Leave the area open as they are asking but with no lights so no one in their right mind would want to use it and demand that they secure is and maintain it while the lease is still active.

    Lawyer might cost a little money but an aggressive one can make them think twice and potentially provide you with some money in the process.

  • Investor · Frisco, TX · Member since 2015 · 84 posts · 52 votes
    11y
    Originally posted by @Brian O'Neill:

    Thanks so much for all the helpful replies! I think maybe the suggestion to call the competition might be helpful. I would be interested in keeping laundry on site for my tenants, and a 50/50 split might be ok, but there's no way I'm going to do business with this company after all the threats and attempts at intimidation. Like I said before, involving lawyers would be my last resort simply because I don't want the headache of a drawn out legal battle.

    Just an update: When I emailed and asked for proof that Jetz had made every reasonable attempt to pay their rent in the last year (Me: "You claim that the rent checks were issued to {previous owner} and returned as undeliverable. {Previous owner} claims that you told them the rent checks were being sent to the owner before them, Mr. ------. If they were being sent to Mr. -------, I'd like to see proof of that. If they were being sent to {previous owner} and returned, I need to see scanned copies of every check, along with proof that the payments were returned as undeliverable before we can proceed. I also need to know how long it's been since any payment has been made for these facilities. I would also like to see your proof of ownership of these machines. As I stated before, I had never heard of your company before receiving your email, and I can find nothing on either machine that would connect them with Jetz Service Co.)

    The guy responded with this: "In reading your response it is obvious you're not interested in mitigating the circumstances and accepting our offer. I assume you chose to disregard my suggestion to talk with your title insurance company. If you were unaware of the lease you should have issue with the title company, not Jetz. We are sincerely open to a reasonable resolution but will not will not continue the unproductive back and forth. As I stated before please do not underestimate Jetz Service Company's resolve and willingness to defend and protect our lease rights. If we're forced to seek legal action any potential resolution from that point forward, as per the lease agreement will include any attorney fees and costs we incur."

    Brain;

    How did this Jetz deal end up?

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