How do I handle this... Breach of contract to lease my property?
A tenant signed a contract for a long term lease to begin March 10, 2023. The property is a 3 bed, 3.5 bath near downtown Houston. The property was fully furnished as I had it on Airbnb and Furnished Finders, but due to very low traffic on these platforms for suitable renters, I decided to get a long term tenant instead. I signed a 45 day contract with a realtor to find a tenant. The property was advertised either as unfurnished or furnished (for a higher rent). I signed a lease agreement with a tenant who wanted the house unfurnished; and I had only two days to remove all the furniture. On March 9, 2023, all furniture was removed, I notified all the utility companies to turn off supply under my name effective on March 10th, the tenant move in date. The realtor informed me that the tenant would pay his deposit by Cashiers check on March 9th but this did not happen. Yesterday was the move in date March 10, 2023, the realtor informed me that he had not heard back from neither the tenant nor the agent that showed him the property. I have disconnected all utilities including taken off the ring camera as the tenant said he did not want it, per the realtor. I have not rented a property before so I do not know if the realtor is in cohort with the tenant or if this is a strange occurrence. What recourse do I have? The realtor said that if the tenant does not show up, the contract will expire by midnight on March 11, 2023.
This is very confusing for me... I moved the entire furniture out and it is costing me to pay for storage.
What do you recommend I do? What is the protocol for this breach of contract? Should I go ahead and turn the utilities back on? Should I still trust this realtor? The realtor has two prospective applications pending and he said he would contact the other two people who have completed their application...I don't know what to do.
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#1 Personal Finance Contributor
- Rental Property Investor
- East Wenatchee, WA
Quote from @Nkechi Jarvis:
A tenant signed a contract for a long term lease to begin March 10, 2023...the realtor informed me that he had not heard back from neither the tenant nor the agent that showed him the property. I have disconnected all utilities including taken off the ring camera as the tenant said he did not want it, per the realtor. I have not rented a property before so I do not know if the realtor is in cohort with the tenant or if this is a strange occurrence. What recourse do I have? The realtor said that if the tenant does not show up, the contract will expire by midnight on March 11, 2023.
This is very confusing for me... I moved the entire furniture out and it is costing me to pay for storage.
What do you recommend I do? What is the protocol for this breach of contract? Should I go ahead and turn the utilities back on? Should I still trust this realtor? The realtor has two prospective applications pending and he said he would contact the other two people who have completed their application...I don't know what to do.
I have never used an agent to source a tenant, but I've placed hundreds of tenants.
Nothing moves on my end and the property isn't taken off the market without holding funds.
Mr/Mrs Tenant, congratulations on being approved. To hold this for you exclusively, holding monies in the amount of (generally the amount of the security deposit) will need to be submitted within 48 hours.
This is basic stuff your agent should be doing to protect you.
Quote from @Nkechi Jarvis:
A tenant signed a contract for a long term lease to begin March 10, 2023. The property is a 3 bed, 3.5 bath near downtown Houston. The property was fully furnished as I had it on Airbnb and Furnished Finders, but due to very low traffic on these platforms for suitable renters, I decided to get a long term tenant instead. I signed a 45 day contract with a realtor to find a tenant. The property was advertised either as unfurnished or furnished (for a higher rent). I signed a lease agreement with a tenant who wanted the house unfurnished; and I had only two days to remove all the furniture. On March 9, 2023, all furniture was removed, I notified all the utility companies to turn off supply under my name effective on March 10th, the tenant move in date. The realtor informed me that the tenant would pay his deposit by Cashiers check on March 9th but this did not happen. Yesterday was the move in date March 10, 2023, the realtor informed me that he had not heard back from neither the tenant nor the agent that showed him the property. I have disconnected all utilities including taken off the ring camera as the tenant said he did not want it, per the realtor. I have not rented a property before so I do not know if the realtor is in cohort with the tenant or if this is a strange occurrence. What recourse do I have? The realtor said that if the tenant does not show up, the contract will expire by midnight on March 11, 2023.
This is very confusing for me... I moved the entire furniture out and it is costing me to pay for storage.
What do you recommend I do? What is the protocol for this breach of contract? Should I go ahead and turn the utilities back on? Should I still trust this realtor? The realtor has two prospective applications pending and he said he would contact the other two people who have completed their application...I don't know what to do.
I agree, the only time you allow them to even take the keys and move stuff out if that was agreed upon is when you have money in your hand. The agent should have talked to you about this and guided you that way. I have helped many clients place tenants, and we put them through a rigorous check and make sure everything is good to go on a rental before we fully endorse the person as a good person to rent (background check, calling previous landlords, calling employers, getting all the info). Getting this info shows the fully committed ones to the ones that are just messing around.
If I were you I would get it marketed back on the market right away (this morning) if not already done so, price it accordingly with no furniture while using great comps for that rental. One that is done you should get a tenant within the weekend. If you wanted to be strict you could try to take legal action; however, this would most likely go nowhere, or ultimately be a dead end after a lot of work.
Just keep the furniture out and list as it sits at a great price you will rent it out and find an agent if you are going to use one that guides you this proper way.
Nkechi
I find it strange that no holding funds/security deposit wasn’t collected one they submitted the application? Once they are approved, the security deposit is no longer refundable. So, if the tenant does not take occupancy, they would forfeit the deposit (as long as your application states this) and then you can re-rent. Once it’s re-rented the previous tenant is off the hook
#3 Managing Your Property Contributor
The tenant should have provided the deposit (non-refundable until they are moved in) at the time the lease was signed. I'd get another person to list it right away.
Quote from @Steve Vaughan:
Quote from @Nkechi Jarvis:
A tenant signed a contract for a long term lease to begin March 10, 2023...the realtor informed me that he had not heard back from neither the tenant nor the agent that showed him the property. I have disconnected all utilities including taken off the ring camera as the tenant said he did not want it, per the realtor. I have not rented a property before so I do not know if the realtor is in cohort with the tenant or if this is a strange occurrence. What recourse do I have? The realtor said that if the tenant does not show up, the contract will expire by midnight on March 11, 2023.
This is very confusing for me... I moved the entire furniture out and it is costing me to pay for storage.
What do you recommend I do? What is the protocol for this breach of contract? Should I go ahead and turn the utilities back on? Should I still trust this realtor? The realtor has two prospective applications pending and he said he would contact the other two people who have completed their application...I don't know what to do.
I have never used an agent to source a tenant, but I've placed hundreds of tenants.
Nothing moves on my end and the property isn't taken off the market without holding funds.
Mr/Mrs Tenant, congratulations on being approved. To hold this for you exclusively, holding monies in the amount of (generally the amount of the security deposit) will need to be submitted within 48 hours.
This is basic stuff your agent should be doing to protect you.
Thank you for your response. This has now given me more insight into the process. We have notified the agent that we hold him responsible for the payment of rent/deposit effective March 10, 2023 until the house is rented.
Quote from @Theresa Harris:
The tenant should have provided the deposit (non-refundable until they are moved in) at the time the lease was signed. I'd get another person to list it right away.
Thank you for your reply! At the time the lease was signed, the realtor asked me how I wished to be paid and I confirmed by Cashier's check. He stated that he would collect the check from the tenant same day the contract was signed which was March 7, 2023. However, we trusted him until March 9, 2023 when he stopped taking our calls and claiming he was in meetings and would only send text messages. As this long term rental deal is our first rodeo, we were not really sure how it worked. Now we know better.
Thanks!
Thank you so much for your reply. It is reassuring to know that the security deposit is not refundable once a tenant is approved. We have notified the realtor that we hold him responsible for the deposit because he assured us he would collect the deposit payable by cashiers check. We now know that the tenant is under contract, and until the house is rented out to someone else, he is responsible for the rent.
Thank you!
Many thanks for your response. I have learned so much from BP community input on this and I feel better informed about the rental process. As I was responding to this, I got a call from the realtor. He apologized, he accepted full responsibility, and admitted his error for not getting the non-refundable deposit at the time the tenant was approved. He has talked with the tenant who reported that his apartment was robbed and he has reported this to the police and he apologized for not communicating this prior to yesterday. Per the realtor, the tenant requested to be allowed to move in next week Wednesday March 15, 2023. However, the realtor notified him that he must pay his non-refundable deposit by 5 pm today and made him aware that he is under contract until another tenant occupies the property. The property is back on the market as available. I have learned an important lesson on the rental process.
Thank you again!
#3 Managing Your Property Contributor
Quote from @Nkechi Jarvis:
Quote from @Theresa Harris:
The tenant should have provided the deposit (non-refundable until they are moved in) at the time the lease was signed. I'd get another person to list it right away.
Thank you for your reply! At the time the lease was signed, the realtor asked me how I wished to be paid and I confirmed by Cashier's check. He stated that he would collect the check from the tenant same day the contract was signed which was March 7, 2023. However, we trusted him until March 9, 2023 when he stopped taking our calls and claiming he was in meetings and would only send text messages. As this long term rental deal is our first rodeo, we were not really sure how it worked. Now we know better.
Thanks!
I'd also talk to his broker and let them know what is going on.
Realtor is not going to pay the deposit. Cancel agreement with Realtor and make them sign it, get broker involved
Move on fast.
Get listing up active unfurnished. MLS and every rental site possible.
Quote from @Caroline Gerardo:
Realtor is not going to pay the deposit. Cancel agreement with Realtor and make them sign it, get broker involved
Move on fast.
Get listing up active unfurnished. MLS and every rental site possible.
Thank you for your response... we plan to speak to his broker tomorrow.
Thanks!
@Nkechi Jarvis likely agent had no clue what he was doing. You also should read up a bit before letting folks just run with your property. I would recommend a PM or some serious quick education.
In short if you self manage and cashflow a bit great, but if you mess it up and end up in a lawsuit losing a bit each month and no having to deal with it will be better than a jacked up lawsuit because you didn't know what you don't know.
Take it slow and be smart.