Hypothetical - tenant signs lease but never pays

Newland, NC · Member since 2013 · 36 posts · 8 votes

What if tenant signs lease, the lease says first month’s rent is due at signing, and tenant ends up paying at the last minute, or does not pay at all?

Let’s say the wording on the lease says “First month’s Monthly Rent is due on upon executing this Lease”.

In general, what is the grace period for “due upon executing this lease”? Is the lease automatically void if it’s not paid on the same day or legally what would happen? If they didn’t pay at all would they still have legal right to move in? I’m assuming not.

If they end up paying last minute that’s a bit of a warning sign to me and I almost would just want to avoid it all together.

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John UnderwoodPro Member

Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

They don't get the keys until all move in money is paid. That includes security deposit.

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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
3y
They don't get the keys until all move in money is paid. That includes security deposit.
7 Reply
Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
3y
We get first and last month's rent plus a security deposit equal to one month's rent at signing. No money, we don't sign a lease. We will accept money order or certified check.
3 Reply
Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
3y
Get the deposit at the time of signing or the lease isn't valid. As John said, don't hand over keys until you have the rent money and also make sure utilities are transferred into their name.
2 Reply
Wendy Man
Member since 2019 · 104 posts · 35 votes
3y
Some ideas. Check your local jurisdiction laws of course.
If signing in person You can countersign after they hand the funds.
You can also state in lease that the lease is contingent on the receipt of such funds.
Or the lease can state that you can terminate immediately (or that it terminates automatically) with no obligations if funds not received within x days of signing.
like others said No keys until all done.
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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
3y
You don't sign a lease, and then wait,.............(the music from Final Jeopardy is playing in the background)......to get the money. They MUST pay when they sign the lease, or no keys. Period.
4 Reply
Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3y
Quote from @Ricky Stafford:

Some Tenants will apply, be approved, and agree to rent a place a week or two in advance. In those situations, I require them to pay the deposit within 24 hours of approval and they must use certified funds (money order, cashiers check, cash) so I'm not waiting for a check to clear. Once they pay, I send them the lease to sign. In my lease there is a clause that talks about taking possession and it essentially says that if they fail to pay all amounts owed and take possession on the date agreed, they forfeit all monies paid and I can offer it to the next person.
I will typically hold it for a 2-3 days attempting to make contact because sometimes life happens and people make mistakes. If I haven't heard anything within 72 hours of the lease start date, I cancel the lease, forfeit their deposit and any other money paid, and I put it back on the market.
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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3y
Oh, but what if I send the lease and the Tenant fails to sign it? Same thing. If they verbally agreed to move in on the 15th and they haven't signed the lease or otherwise fulfilled their obligations, then I'm moving on.
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Eliott Elias
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
3y
The tenant should not receive keys until first month and deposit is received. If they delay I would start looking for a new tenant, not a good start.
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Colleen F.Pro Member
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
3y
@Ricky Stafford our lease says it becomes valid on signing and deposit. No deposit it isn't a valid lease. I don't gives keys to people who don't pay. They can venmo you on the spot.
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Adam Martin
Rental Property Investor · Member since 2020 · 1k+ posts · 1k+ votes
3y
This would never happen to me, a big part of my screening is all money needs to be ready at lease signing and if it will take them a while to have the money ready it is going to take me a while to be available to show to them until they have it. I rent B+ to A- so it may be different at lower priced rentals but I want tenants that have been able to save in the past and aren't living paycheck to paycheck. They know they are moving and that it is expensive, if they need I few weeks now I feel they are also going to need a few weeks after their car breaks down or they have a medical bill to pay rent. Even if they are taking possession a few weeks from signing I collect first months and deposit at signing, and they only have a couple days to have the funds ready. They don't get keys until I have verified that the utilities are turned over if we have signed the lease in advance.
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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
3y
No money, no lease,...no lease, no keys,...no keys, not tenant,...no tenant, property is still up for lease,...and I'm still taking applications.
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Jill F.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
3y
The lease is not executed until both parties have signed . This is why you sign last and you don't sign or hand over the keys until you have all the money and all pre move in requirements such as utility transfers, vet records, insurance proof, etc are complete.
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Ricky Stafford
OP
Newland, NC · Member since 2013 · 36 posts · 8 votes
3y
Wow…didn’t expect this much good info.
I’m doing everything remotely and through Zillow. We all already “signed” (our digitally signed names are there) but there hasn’t been a payment made yet.
If for some reason they never paid and I have held the property for nearly a month for them, do I have any legal recourse for all this wasted time?
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Henry ClarkPro Member
Developer · Member since 2020 · 4k+ posts · 4k+ votes
3y
Who has the keys?
0 Reply
Ricky Stafford
OP
Newland, NC · Member since 2013 · 36 posts · 8 votes
3y
They don’t have any keys yet.
1 Reply
Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
3y
Quote from @Ricky Stafford:

Wow…didn’t expect this much good info.
I’m doing everything remotely and through Zillow. We all already “signed” (our digitally signed names are there) but there hasn’t been a payment made yet.
If for some reason they never paid and I have held the property for nearly a month for them, do I have any legal recourse for all this wasted time?
Just send them a registered letter stating that due to non-payment of the amount agreed upon in the signed lease (give the date signed), you have no other option to conclude (not assume), the tenant isn't interested in the property. This is to be considered legal notice of termination of that lease.
1 Reply
Jay ThomasPro Member
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
3y
It's important for tenants to remember that all move in money must be paid in full before they receive the keys. This includes their security deposit, which is typically a significant amount. As such, it's essential to have this fee taken care of before occupying the property. It would be a shame to go through all the work of moving only to not have access due to an unpaid fee!

So, make sure you've got your move in money squared away before expecting to get those keys! If you need help with understanding what's needed or how much needs to be paid, don't hesitate to reach out and ask. Your landlord should be happy to provide clarity on any fees associated with renting their property.
[email protected]832-889-5607
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Daniel Patrick Glushko
Member since 2022 · 13 posts · 7 votes
3y
For a contract to be valid and exchange needs to occur… in this case, the exchange of money must be made for the lease to be valid.
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Curtis Mears
Property Manager · Raleigh, NC · Member since 2014 · 728 posts · 596 votes
3y
@Ricky Stafford
When I sign a lease, I require all money to be paid before I hand over the keys. As for rent payments, my state (I think all states are different) allows a 5 day grace period. If I do not get the rent within that period, I send a 10 notic e to pay. After that, eviction process starts.
First, you need to know your states laws. Then, set up processes that adheres to state laws and your lease. Let every tenant know the process, and follow the process.
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Elise Bickel TauberBusiness Member
Real Estate Agent · Cranberry Twp · Member since 2017 · 384 posts · 198 votes
3y
The best answers is going to be "Consult an attorney". This really varies state by state and what your lease says. Our lease states that the lease is not "executed" until the lease is signed and deposit is paid. So if the tenant signs the lease but doesn't pay, we have the right to continue to show and sign a lease with another party. The first to sign and pay is the lessee. When someone is approved with us we hold off on running any other apps for 48 hours to review the lease, sign the lease, and pay deposit.If that isnt done in the 48 hours, we get back to showings. Now, we are nice enough that if we have another approved applicant who is getting ready to sign a lease we give them one final option to pay deposit/sign the lease but if they do not, we have no problem moving forward with someone else.
On a nonofficial response, I dont like the idea of someone signing a lease with me and then not paying money. If they can't pay first month rent they are going to have problems paying the entire time. Trust me on this!
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