Can Renters Signs a Lease Before I Close on Property?

Question

Hi,

I'm currently scheduled to close on a rental property at the end of September. The listing agent has found me a tenant that loves the home and would like to sign a lease as soon possible. I've down a credit, background check as well as contacted her previous landlords.

Can I legally sign and accept a deposit for a property if I don't own it yet? They are looking to move in as soon as possible and I would love to have a lease signed before closing.

Thanks!

Mindy Jensen · Answer

@Kenny L., what the others haven't talked about is the major red flag that is showing by the potential tenants wanting to move in as quickly as possible.

Oftentimes, this means they are being evicted, or are in danger of being evicted. Why do they want to move in so fast?

And why is the listing agent finding tenants for you? That seems hinky...

Max T. · Answer

You can do the whole process but the landlord will be the seller and the seller will need to sign. When you close the lease will transfer to you the new owner. Obviously you and the seller need to be on the same page.

Justin Tahilramani · Answer

@Kenny L. - Im not an expert in your area, but I can almost guarantee you that you can't lease a home that you don't own yet. Whats the hurry to get the lease signed? If they like it they will sing the lease when you officially own it. No good can come from jumping the gun on this.

By the way - a professional property management company should have already provided you with the answer to this question.....

James Wise · Answer

I would wait until you have possession of the property before signing the lease. You never know what can happen that could delay you gaining possession.

Mindy Jensen · Answer

@Kenny L., thanks for clarifying. I've read a lot of horror stories on the forums, and some newer landlords don't necessarily know all the red flags to watch out for.

Red flags aren't automatically bad - and those are plausible answers.

JD Martin · Answer

Draw up an options contract between you and the prospective tenant, regarding the potential property, with one of the "no fault" out clauses that you don't close on the property for any reason whatsoever. I would also recommend pushing the effective rent date out as far as possible, and put it together without any damages to you should you surpass the availability date, if at all possible. If they really love the place and you are confident it is going to close, you should be able to get pretty close on dates.

Remember: this contract is just a future options contract, valid between you and the tenant only, contingent upon you becoming titleholder to the property in question. The property is incidental to the contract; you could even leave the property address out altogether and be vague, i.e. "expects to become fee simple owner of a property in XX, Florida, or "Main Street, XX, FL", etc.

Kenny L. · Answer

@Mindy Jensen, there was a family tragedy that happened at their current home that's being rented. The family just wants a fresh start as soon as possible. I've talked to the tenants previous two landlords and they had nothing but good things to say.

The listing agent is a friend of the tenant and thought this would be the perfect location for them. Thanks for looking out!

Kenny L. · Answer

Appreciate the input! I'll see if I can work something out with the current owner, if not we'll just wait til after closing.

Rich N. · Answer

unfortunately, no, you can not.

Can Renters Signs a Lease Before I Close on Property?

Can Renters Signs a Lease Before I Close on Property?

Most Popular Reply

9 Replies